Personal Finance from Emirates Islamic

• Interest is any increment earned over and above the repayment of a loan amount. It is not permissible as per Shariah.
• Profit is any additional revenue generated through various trade activities. Earning profit is permissible as per Shariah. An Islamic Bank does not earn any interest on its financings. It generates profits by executing various commercial activities such as sales, Ijarah and construction etc.

A Personal Loan is money you borrow and pay back with a high or low interest rate over multiple years.

However, a Personal Finance is a Shariah-compliant product designed to provide you with liquidity based on the Shariah concept of Murabaha (cost plus profit). Thus, this product is riba-free.

There are many different types of Riba in Shariah. One of them is lending or borrowing money against interest, which is an increment occurring in contracts while creating or postponing debts. Islamic banks must abstain from conducting any transactions where they pay any charges or receive any income via interest.

Conventional loans and interest rates are not Shariah compliant because they rely on interest, or Riba.

Various alternatives replace conventional loans and interest in Islamic finance, as Riba is strictly prohibited. These alternatives include Murabaha (cost-plus-profit), Ijara (leasing), Mudarabah (profit-sharing investment) and Musharakah (joint ventures).

Emirates Islamic Personal Finance is a Shariah-compliant product based on the Shariah concept of Murabaha.

Murabaha is a contract for the sale of certain assets, which in this case are EI Funding Certificates. The bank sells the assets to the customer for the cost plus the profit margin (markup) as made known and agreed on by all parties. After buying and possessing the assets, the customer sells them to a third party and the sale proceeds are transferred to the customer’s account.

The Certificates represent a common share in Shariah-compliant assets including, but not limited to, Sukuks, equity and real estate. They are valued at USD 10 each and are deposited in Nasdaq Dubai.

In Personal Finance, Murabaha is a form of Shariah-compliant sale contract whereby Emirates Islamic (as a seller) sells Certificates to the customer for a price equal to the Certificate Cost (the finance amount) plus the Murabaha profit rate.

The Murabaha offer for Personal Finance is valid for three hours from the time you receive the email.

If we do not receive a response from you within three hours, Emirates Islamic will consider that you have accepted the Murabaha offer for Personal Finance.

The customer must choose between two options once the Murabaha Sale is executed.

1. Update us on your custody account number with Emirates NBD Securities. The Finance Asset will be transferred to this account once the Murabaha Contract is completed, or
2. Authorize Emirates NBD Securities to sell the Financing Asset to a third party on your behalf. The sale proceeds will then be transferred into your account with Emirates Islamic.

Note: If you would like to get the funds, you have to choose option 2.

The customer has full liberty to choose any of the above two options to complete the trading process.

If you have not chosen any of the above options by the cut-off time, Emirates NBD Securities will sell the Certificates owned by the customer to another party and transfer the sale proceeds to your Emirates Islamic account.

• A Conventional Bank is a financial institution governed by conventional banking laws. It receives money from depositors and offers liquidity to borrowers based on the loan structure with interest rates.
• An Islamic Bank is a financial institution that provides Shariah-compliant products based on commercial contracts for activities like sales, leasing and construction. It is governed by Islamic Banking laws, allowing customers to carry out commercial activities for profitable purposes in Shariah-compliant ways.

A Borrower is a person or entity who borrows money from someone else. A Financee is a person or entity who agrees to settle a deferred price payable upon the execution of a sale or leasing contract.

According to Shariah rulings, it is impermissible to buy a loan at a discount or a premium. Thus, an Islamic bank offers Shariah-compliant liquidity to help customers settle outstanding debts with other banks.

On the other hand, conventional banks buy out the loan without any Shariah arrangements.

Instalments paid by a Financee in an Islamic Bank represent the payment of a sale price, lease rental or service charges. However, instalments paid by a Borrower in a Conventional Bank represent the repayment of a previously taken Loan.

Borrowers in a Conventional Bank agree to pay a Late Payment Penalty fee in case they delay in settling instalments on agreed due dates. These amounts are taken as additional profits for the Bank.

Financees in an Islamic Bank agree to pay an extra obligated Charity Amount in case they delay in settling instalments on agreed due dates. The Bank does not benefit from this amount – the amount goes towards charitable purposes.

No, Emirates Islamic does not charge any additional profit on accrued profit on any credit product granted to customers.