Distinguish lending, sale and lease agreements
Islamic finance contracts describe different relationships rather than interchangeable names for a cash loan. Qard hasan involves repayment of the principal without contractual interest; any administrative charge needs separate examination. In murabaha, a seller acquires an asset and sells it at a disclosed cost plus an agreed profit. Ijara concerns the use of an asset for rent, making ownership, maintenance and the lease term important. For an Indian transaction, identify the actual asset, the sequence of purchases, the parties' responsibilities and every payment before judging a proposal by its marketing label.
Understand partnership outcomes
Musharakah and mudarabah allocate capital and management differently. Musharakah brings partners' capital together, with agreed profit-sharing arrangements and ordinary financial losses allocated according to capital contributions. In mudarabah, a capital provider finances an activity managed by an entrepreneur; profits follow the agreed ratio, while ordinary investment losses fall on the capital provider unless the manager's misconduct, negligence or contractual breach changes liability. Neither structure should be presented as a guaranteed investment return. AAOIFI's standards and the IFSB glossary explain these concepts; Indian enforceability, registration, taxation and the permitted fundraising route still require examination of the specific arrangement.