MASTER OF BUSINESS ADMINISTRATION

SEMESTER 2 2019/2020

ZCME6251 ISLAMIC WEALTH MANAGEMENT

INDIVIDUAL ASSIGNMENT 1

NAME : KAYEILVILI THAMILCHELVAN

MATRIC ID : ZP04211

LECTURER : DR. ROSLAN BIN JA’AFAR

SUBMISSION DATE : 29TH MARCH 2020

itself through different commands prescribed by Shariah, like zakat, sadaqat and many more.

Second, it may also be used in the sense of purifying something with wealth, which is purifying a

human being from his sins with wealth.

In Islam, all wealth belongs to Allah. Man is a trustee and needs to use it in accordance with

Islamic teachings and wealth is in abundance. Everyone has been allocated what is due to him. It

is up to him to work on it. However, from conventional perspective, Wealth is generated by

individual and hence he is the rightful owner. Wealth is scarce. It is man who generates wealth

and not apportioned to him and he has complete freedom to use it. Efforts are needed to generate

wealth under both perspectives. In conclusion, Man’s effort can only be successful with the

permission of Allah.

The most important means of purification through obligatory means is zakat. Literally, zakat is

used in two meanings which is growth and purification. For example, paying zakat and other

non-obligatory donations is a means of heart and soul purification for both the payer and the

payees. On the part of the payer, paying these is the solution to natural human greed and the

desire to accumulate more and more wealth. It is also a means of inducing the spirit of sacrifice

for the sake of God. For the other party, the receipt of money in such forms pacifies his negative

emotions towards society in general and towards the rich class in particular. Apart from the

meaning of purification as explained thus far, zakat is also literally used in the meaning of

increase and growth. The economic benefit of the wealth purification in the form of wealth

increase through paying of obligatory and optional means. Share a part of wealth with those who

are not as lucky as you are. They are the poor and the needy and not only the voluntary spending

in the form of normal charity, but also in the form of endowments or waqf that has perpetual
benefit to the beneficiaries. Benefits accruing to the individual under voluntary charity is where

Purification for the soul. Allah, The Most High, says take sadaqah from their wealth in order to

purify them and sanctify them with it. Allah replaces for the giver whatever he spends, while He

will raise the status of his soul. Allah, the Most High, said regarding this: “And whatever you

spend of anything in Allah’s cause, he will replace it.” Charity is a reason for the increase and

prosperity of wealth, for it is a manifestation of gratitude to Allah, the Giver. This is because a

person who is grateful to Allah is promised an increase in blessings.Allah says. Benefits accruing

to the society where Voluntary aims complement the function of Zakah in the society and

engendering solidarity, cooperation, stability and love in the Muslim society.

Thus, paying zakat and other non-obligatory donations is a means of heart and soul purification

for both the payer and the payees. On the part of the payer, paying these is the solution to natural

human greed and the desire to accumulate more and more wealth. It is also a means of inducing

the spirit of sacrifice for the sake of God. For the other party, the receipt of money in such forms

pacifies his negative emotions towards society in general and towards the rich class in particular.

Islamic wealth management must be conducted in accordance with Shariah. While conventional

wealth managers do not have to spend much thought on whether their offerings are ethical or

otherwise in compliance with the faith, believes or morals of a client unless instructed to

incorporate these aspects Islamic wealth management has more complex approach.

As Shariah defines five necessities as basic for human existence, Islamic wealth management has

to consider those aspects of religion, life, intellect, progeny and property. Thus, Islamic wealth

management not only focuses on the enhancement of wealth by generating returns, but also the

protection of wealth through risk management, takaful and Islamic trusts, as well as the
distribution of wealth through gifts, alms and endowments, or hibah, zakat and waqf, as well as

wills. While in the past, Islamic wealth management has been primarily focused on investment in

Islamic bonds, or sukuk, Shariah-compliant funds and property or gold-backed investments,

offerings have become at least partly more sophisticated as of recently. Maybank, for example,

enhanced its Islamic wealth management portfolio towards a wider Shariah-compliant suite of

financial products and services, including Islamic deposits, takaful, treasury, Shariah-compliant

shares, private equity, structured wealth management products, Islamic estate planning, as well

as social impact investments which, by the way, have become also attractive for non-Muslim

customers.

Islamic Wealth Management has emerged as part of Islamic finance and broadly shares the

features, underlying principles, advantages as well as limitations. Except the legalistic

distinctions, just as Islamic finance is broadly based on conventional finance to the extent that

currently it can hardly function without embracing or depending on interest-based tools, such as

LIBOR as a benchmark. Islamic Wealth Management also faces similar limitations and

constraints.

The Islamic finance is primarily focused on Sharīʿah-compliance, which strictly means that it is

legalistically distinctive due to adherence to certain prohibitions such as riba which is commonly

equated with interest in a blanket manner, gharar which is excessive risk and uncertainty and

maysir, gambling and a few things that are prohibited on their own, such as pork, intoxicant,

pornography and many more.