Riba in Arabic means increase or increment. It is a contractual or pre-conditional increase in a loan or a debt. The term Riba is used to describe the undeserved increase in a loan or a debt. Riba means interest and interest is prohibited in Islam.

Qard is an interest free loan and a loan free from profit. It is a loan extended on a goodwill basis and the borrower is only required to pay the principal amount borrowed. However, the borrower may pay an extra amount at his discretion, as a token of appreciation.

Ijarah is a form of leasing. It involves a contract whereby the bank buys an item and then leases it to the client. The item is leased to the client for a specified rental and term which is agreed on in advance by both parties. During this period, the bank makes the use of the asset available to the customer.

Ijarah-wa-iktana is similar to Ijarah, except that included in the contract is a promise from the customer to buy the equipment at the end of the lease period, at a pre-agreed price. Rentals paid during the period of the lease constitute part of the purchase price. Often, as a result, the final sale will be for a token sum.

Wakala is an agency contract. Included in the terms of the Wakala is an agency fee which is charged for the agent's expertise. The bank is appointed as the client's agent and the client pays a fee for the bank's expertise.

Murabahah is derived from the Arabic word Ribh which means profit. This is a contract sale between the bank and its client for the sale of goods at a price which includes a profit margin agreed by both parties. As a financing technique, it involves the purchase of goods by the bank as requested by its client. The goods are sold to the client with a mark-up. Repayment, usually in installments on a deferred basis is specified in the contract.

Musharakah is a word of Arabic origin which literally means sharing. In the context of business and trade it means a joint enterprise in which all the partners share the profit or loss of the joint venture. means partnership and involves placing one's capital with another's, with both sharing in profits and rewards. Any kind of profit-sharing ratio can be placed, but losses must be proportionate to the amount invested.

Diminishing Musharakah, according to this concept, a financier and his client participate either in the joint ownership of a property or an equipment, or in a joint commercial enterprise. The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically, thus increasing his own share till all the units of the financier are purchased by him so as to make him the sole owner of the property, or the commercial enterprise, as the case may be.

Mudarabah is a special kind of partnership where one partner gives money to another for investing it in a commercial enterprise. The investment comes from the first partner who is called "rabb-ul-mal", while the management and work is an exclusive responsibility of the other, who is called "mudarib".

Shari'ah refers to Islamic law as revealed in the Quran and through the example of Prophet Muhammad (PBUH). A Shari'ah compliant product meets the requirements of Islamic law.

Shari'ah compliant refers to an act or activity that complies with the requirements of the Shari'ah, or Islamic law. The term is often used in the Islamic banking industry as a synonym for 'Islamic' - for example, Shari'ah compliant financing or a Shari'ah compliant investment.