Regulatory Alerts2025-01-24 | IFPD Circular No. 01Adoption of AAOIFI Shariah Standard No. 31
This document formally adopts AAOIFI Shariah Standard No. 31 regarding controls on Gharar in financial transactions and provides specific clause-by-clause clarifications for its application in Islamic Banking Institutions. It defines Gharar as excessive, medium, or minor, and establishes that excessive Gharar in exchange-based contracts invalidates them unless justified by Shari'ah-recognized necessity. Furthermore, the standard details specific conditions under which Gharar in subject matter, price, periods, and delivery requirements renders contracts invalid, while clarifying exemptions for certain security and indemnity arrangements.
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