Euris Group is responsible for the administration, development and management of Shariah principle holdings.
Euris Group aims to act as a bridge between Europe and the MENA region, channeling investment funds into an innovative asset class
About Euris Group
About us
Euris Group
Islamic finance
The ban on interest
Usury or interest (Riba) refers to any excessive remuneration related to time. It is therefore
forbidden to pay interest on the basis of time alone (`Money alone cannot create money
without the action of physical capital or labour). More than usury, it is the very concept of
interest that is prohibited here. We have constructed a system which avoids this.
Prohibition of financing illegal activities
The asset financed must comply with Sharia law, which excludes operations that involves trading of forbidden (haram) goods/services, sectors, i.e. sectors such as alcohol, weapons, pornography, the pork industry, casinos, etc.
Financing the real economy
All financing must be backed by tangible assets.
It is a requirement to have real assets underlying all financial transactions.
Risk-sharing principle
This principle aims to ensure that the parties to a transaction (the capital holder and the
capital user) assume their responsibilities in case of success as well as risks.
Obligation of transparency and fairness
Uncertainty in the sale of a future thing arises from the impossibility of predicting the quality
and/or quantity of the thing sold. The thing sold must be clearly defined and known for the
sale to be valid and for there to be no uncertainty.
These products are based on sound financial principles.
The mere eschewing of interest does not mean that the financing is naive or unprofitable.
The principle of sharing profits and risks is nothing but equity financing.
Islamic style mortgage, the faith outlaws the charging of interest, so to skirt this restriction
“financiers” instead charge rent and allow the borrower or tenant to gradually purchase equity in the property. The motivation may be to adhere to religious codes but the result is a less risky financial arrangement for the household than a standard home loan.
Islamic banking is currently beginning to attract Non-Muslim customers, who are interested in this alternative way of banking.
Indeed, a growing number of Non-Muslims are turning to Islamic banking as customers, spooked by turmoil in the Western banking system increasingly see the sector as safe and more connected to the real economy.
In my opinion, Islamic banking will benefit from this new consumers’ interest and grow even more quickly than it recently did.
It is surely a good idea to explore how the spirit inherent in the “moral economy” of Islam could enable a just and ethical approach towards the management of systemic risk in economics, in business and finance the way risk-sharing, implicit in Musharaka, works, for example, with lenders sharing the borrower’s risk, and the notion of Mudharabah, the sharing of profit. This is very different from the way that conventional finance transfers the risk quickly and frequently onto someone else with profit going just one way.
“The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service.” They suggested “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”, adding that sukuk may be used to fund the “car industry or the next Olympic Games in London.”