Tawarruq
Commodity-based transaction to obtain cash in a Shariah-compliant manner.
Detailed Description
Tawarruq
What is the primary purpose of Tawarruq?
The primary purpose of Tawarruq is to provide individuals and businesses with cash liquidity through a Sharia-compliant process.
What are the two main types of Tawarruq?
The two main types of Tawarruq are Organized Tawarruq, facilitated by financial institutions, and Unorganized Tawarruq, conducted independently by individuals.
What criteria must Tawarruq meet to be considered Sharia-compliant?
Tawarruq must involve asset backing, avoid speculation, have clear terms, and comply with Sharia principles.
How does Tawarruq differ from conventional financing?
Tawarruq is interest-free, asset-backed, and promotes ethical considerations, while conventional financing often involves interest and unsecured loans.
What are some applications of Tawarruq in Islamic finance?
Tawarruq is used for personal financing, corporate financing, and various Islamic banking products like home and car loans.