Frequently asked questions

What is Islamic finance?

It is a financial system that complies with Syariah principles.

What are the major prohibitions in Islamic finance?

There are 3 major prohibitions in Islamic finance. These are, but not limited to, the following:

  • Interest (Riba)
  • Uncertainty (Gharar)
  • Gambling or speculation (Maysir)

Are Islamic finance products and services for Muslims only?

No, it is for everyone.

What are the categories of Islamic finance contracts?

Islamic Finance/Contracts

Sale-based

Murabahah
Tawarruq

Safekeeping

Wadi'ah

Leasing

Al-Ijarah
Al-Ijarah Muntahiya Bittamlik
Al-Ijarah Thumma Al-Bai’

Agency

Wakalah

Partnership

Mudarabah
Musyarakah

Why is interest (riba) prohibited in Islam?

Riba refers to any guaranteed, predetermined increase on a loan or debt without any underlying trade or service. In simple terms, charging or paying interest.

For example, lending a friend B$500 cash with an additional payment condition.

  • It is considered unjust enrichment because one party benefits and the other party loses.
  • It can lead to exploitation and inequality.

The Quran states: “Those who consume interest (riba) cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns [to dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.”- Al-Baqarah:275

How does Islamic finance promote ethical investment?

Islamic finance promotes ethical investing by prohibiting interest (riba), avoiding harmful industries, and restricting excessive speculation.

How is Islamic finance different from conventional finance?

Islamic finance differs from conventional finance by emphasising profit-and-loss sharing, fairness, and ethical investment principles. It operates without interest (riba) and focuses on financing activities that contribute positively to society and the economy.

How does an Islamic savings account work?

An Islamic savings account does not pay interest. Instead, the bank invests your savings in Syariah-compliant activities. Depending on the concept applied, you may receive a share of the profit (Mudarabah) or be given a small gift (hibah). This ensures that your funds are managed ethically and in accordance with Syariah principles.

What is sukuk?

Sukuk are often referred to as Islamic bonds. Instead of representing debt, they signify ownership in an underlying asset, project, or investment activity. Returns to investors are generated from the profits produced by these assets, rather than from interest payments.

In Brunei, sukuk play an important role in government financing and the development of the capital market.

According to the AAOIFI Shariah Standard (17), sukuk are certificates of equal value that represent undivided ownership of tangible assets, usufruct, services, or the assets of specific projects or investment activities.

What is takaful and how is it different from insurance?

Takaful is the Islamic equivalent of insurance. It operates on the principles of mutual assistance and cooperation, where participants contribute to a common fund. When a loss occurs, a portion of the fund is used to provide financial support to the affected participant.

Unlike conventional insurance, takaful is structured to avoid interest (riba), excessive uncertainty (gharar), and investments in prohibited industries.

What is the first Islamic financial institution in Brunei Darussalam?

Perbadanan Tabung Amanah Islam Brunei (TAIB) was established in 1991. 

How do Islamic finance institutions generate profit without interest (riba)?

They rely on trade-based and asset-based contracts instead of conventional interest. These include profit-sharing and leasing structures. Gains are derived from business activities, not interest payments 

What is the Syariah governance structure implemented in Brunei Darussalam?

  • Syariah Financial Supervisory Board (SFSB): An authoritative body responsible for the ascertainment of Islamic law within Brunei Darussalam’s Islamic financial sector. Its mandate covers Islamic banking, takaful, Islamic financial business, Islamic development finance, and any other Syariah-based activities carried out, supervised, or regulated by the Central Bank.
  • Syariah Advisory Body (SAB): Established under the respective legislations governing each Islamic financial institution - including the Islamic Banking Act (Cap. 168) for Islamic banks, the Takaful Order, 2008 for takaful operators, the Securities Market Order, 2013 for Islamic capital market intermediaries, the Finance Companies Act (Cap. 89) for finance companies conducting Islamic financing business, and the Perbadanan TAIB Act (Cap. 163) for Perbadanan TAIB.

What types of Islamic financial institutions are there in Brunei Darussalam?

Brunei Darussalam has: 

  • An Islamic bank 

  • An Islamic trust fund 

  • Takaful operators 

  • Islamic capital market services 

What is Brunei Darussalam’s goal for Islamic finance?

Brunei Darussalam aspires to position itself as an international hub for Islamic finance, aligning with Wawasan 2035. This goal includes diversifying the national economy and promoting high-quality Syariah-compliant financial services to both domestic and global markets.