Scholar Answers

Yusuf Talal DeLorenzo, currently lives in the U.S.A, and has been in the Islamic Banking and Finance scene for a long time.

Presently he is Chief Shariah Officer and Board Member at Shariah Capital.

Shaykh Yusuf is a well-known and respected Shariah advisor and Islamic scholar whose career spans more than 30 years. Based in the Washington, DC area, he serves as a Shariah advisor to over 20 global financial entities, including index providers, banks, mutual funds, real estate funds, leasing funds, institutional investors, home finance providers, alternative asset managers and others.

Shaykh Yusuf is the author of “A Compendium of Legal Opinions on the Operations of Islamic Banks”, the first English reference on the fatawa issued by Shariah boards. His three-volume publication has become the standard reference for Islamic financial institutions. In addition, Shaykh Yusuf wrote the introduction to “Islamic Bonds”, the 2003 book that introduced Sukuk and transformed the world’s Islamic capital markets. His written work has appeared in journals and newsletters and as chapters in books, including Euromoney’s “Islamic Asset Management”, “Islamic Retail Finance and Islamic Finance: Innovation & Growth”. His entries on the terminology of Islamic Finance appear in The Oxford Dictionary of Islam.

Shaykh Yusuf is also a special consultant, appointed by the Asian Development Bank and the Islamic Development Bank in Jeddah to the International Financial Services Board (“IFSB”) on the subject of Sukuk. IFSB is the international standard-setting body of regulatory and supervisory agencies that have a vested interest in ensuring the soundness and stability of the Islamic financial services industry, broadly defined to include banking, capital markets and insurance.

Shaykh Yusuf has served as a judge in Islamic product reviews and has been a keynote speaker at numerous Islamic conferences. He has been interviewed by and quoted in the Financial Times, The New York Times, Fortune, The Wall Street Journal, Banker Middle East, Islamic Business & Finance and other publications.

Past assignments include

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: Is there any restriction in the extent of profits we can take from our customers in halal business transactions in order not to violate Islamic law? I heard it must be less than 30%, is it true? what is the reason?

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: One of my friend bought 500 stocks for Vrio company for 35 dollars each stock share and the next day some Japanese company bought this Vrio company and the stock price shot up to 65 dollars and he decided to sell it. Is this allowed or not allowed according to Sharia'h? Please email the answer.

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: I read that Islamic Banks usually make transfer of ownership just an option to sell at the end of a lease. Does this mean that during the commencement of the contract, Islamic Banks retain the ownership indefinitely and include an option to sell only if they feel it is rewarding?

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: Is there any right for a mudarib to share the incremental value ofthe rabbul maal's assets at the time of liquidation? Wassalam, Salim M Basalamah

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: Is the following transaction classified as Murabahah? If not, is it permissible? I invest a certain sum of money in a company to procure certain raw materials for a fixed rate of return and for a turnaround time of one month. The capital gets re-invested every month and I receive the income monthly as well.

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: is it okay to put money away for retirement? if so, do you recommend any specific type of funds?

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: My question is about taking a loan against my vested account balance. I've been told that any money borrowed must be repaid with interest. Essentially, I must repay myself with interest. I've made the argument with the plan administrators that since the account does not accumulate at some pre-determined fixed rate of interest (there is both chance of gain and loss) why should I be compelled to repay my loan with interest. They think that I should be glad to repay myself with interest and thereby protect myself from adverse market conditions, etc. I've explained my position with regards to Islam and they have still refused to honor my request for an interest free loan. What advice can you offer me? I could really use the loan to repair a house that I purchased interest-free.

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: (South America) I was particularly interested to know what kinds of sectors islamic investors should avoid, like the financial sector. I assume that some smaller banks generate more revenue from profits arising investment returns on deposits received. Does it make sense to say that in a scenario where 80% of the bank's revenue is generated from investment returns (from financing development projects), then from whatever returns I might make as a Muslim investor in this bank, I would have to cleanse 20%? I know that I am oversimplifying the scenario for most banks am not taking into account the fact that halaal investment projects in the bank might constitute only a small part of the bank's overall profit. But assuming a direct relationship (each % of halaal investment by the bank contributes 1% of profit to the banks bottom line), is my reasoning correct. I am also wondering to what extent my assumptions about the ratio of halaal to haram (investment vs loan financing) business dealings in a typical bank are sound.

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: Why is hedging haram?

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: What is the consensus about investing in Israeli companies, or companies that invest in Israel? Should those not be excluded by the Shari`ah screens like companies that deal with Alcohol, pork, banks, etc...? Salam R Tarek

Answer: To our knowledge there is no Shari'ah dialogue involving investment prohibition against Israeli companies or companies that invest in Israel. The Shari'ah screens do not take political background/identity or religious affiliation into account. The Prophet himself, upon him be peace, is known to have transacted with people of other

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: In the quiz for the lesson called What is Islamic Investment I have answered question number 8 as True, (a. true), and my answer was wrong (only one wrong in ten questions; I have answered the rest correctly.) Then I have reviewed my wrong answer,the explanation was that "Currently, funds claiming to be Islamic are not required toprove that they are Shari'ah compliant. Many do not employ the stringent criteria of

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: I had a question about investing in the stock market I have heard that it was questionablebecause of a condition that is necessary in an islamic contract - that of ijaab and qabool (offerand acceptance). I have heard that when people are in a contract with one another (in any form,including as shares of a company), that a necessary element in the islamic contract is that the

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: In the second lesson, there is a reference to Nabil A. Saleh's Unlawful Gain and Legitimate Profit in Islam, London 1992. This is the second edition. Can you tell me whether it is substantially improved from or better than the first edition? I ask because I own a copy of the first edition. Thank you.

Answer: The only copy I have is of the second edition and so I am unable to compare. Likewise, there is nothing in the Introduction to indicate any major changes or

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: (South America) While I understand that the shariah is strongly opposed to riba inall its forms, I was condering what the rationale for this is. The Quranic text and prophetictradition are clear in prohibiting it but I haven't yet seen a clear explanation of why it isproblematic. I also fail to see WHY asset-backed ownership is the only permissible type in Islam

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: Are there any alternatives that can be used today by compaines, when they need to borrow money to fund project other than from (interest bearing means) i.e. the banks and the capital markets?

Answer: Alternatives certainly exist. When companies need influxes of liquidity, they generally resort to one of two options: they seek loans, or they issue bonds or more stock.

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: As a follow-up to Sarah's question on company granted stock options, I'd like to ask about the Zakat that is due on gains received via these options. In certain cases (as with some of the recent IPO's in the tech sector), the compensation achieved fromstock options can be huge -dwarfing the other benefits an employee receives (i.e.salary). According to at least one booklet I've read about Zakat calculation, the rate

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: You have detailed the screening process for investing in the equity market. What about Supermarkets Companies.... they do sell haram meat including pork and sell wine. Therefore would these be excluded or the profits be regarded as a small percentage of their income and therefore acceptable.

Secondly, a slightly varied form of investment. Suppose I own a property, can I rent

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: Can riba money be used to pay off a riba loan? If so, would this be considered purification of wealth?

Answer: It was explained in the section on Purification (Lesson Six, Section Six) thatincome from interest must be given away, and that? "as a general principle, sincethe money being distributed represents impure income, it must not be used in a way that

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: First, Praise be to Allah for this course, the designers and instructors of it. I pray Allah continue to bless each of you. My question pertains to the interpretation of verses 3:130 and 3:132, not to be argumentative or dogmatic, but because the verses were used in the lessons.

Since Allah leaves nothing to "chance," and with Him there is no such thing as "chance,"