What is Gharar in Islamic Banking?

It literally means uncertainty, hazard, chance or risk. Islamic dictionary describes it as “The sale of what is not present”. Now let us understand, what is gharar? Gharar in Islamic banking may be defined as: “The uncertainty that is present in the basic elements of an agreement is wording, subject matter, consideration, and the liabilities”. As a matter of fact, it is one of those impediments, which limit the power of decision making. An agreement, that has any element of gharar, which is not valid from the Shariah point of view.

Gharar in the Light of Ahadith:

Let us understand what is gharar, with the help of some examples, in the light of Ahadith:

  • Sale of unborn Camel’s baby, still in the Mother’s womb;
  • Flowers, before they appear on the plant;
  • Milk in the Lactose Glands;
  • Fish that comes in one throw of net;
  • Fruits on the Tree from mere estimation;
  • Any one of the animals from the herd; and;
  • Wool on the body of the animal;

Comparison of Gharar with Few Elements:


It means unawareness or blindness, and it is one of the causes of Gharar. For example, a transaction can be known from all the angles, but Subject Matter’s delivery can be difficult.


It is an event, in which there is a possibility of total loss to one party. Every gambling is a form of Qimar, but it is not limited to gambling.


Every speculative transaction is not Gharar or gambling, until it has any element of Gharar. This is because these activities carried out in the hope of profiteering from the rise and fall of the prices of commodities or assets.

Contemporary Law:

It means the present and prevailing law, and it also deals with the topic of Gharar in Islamic banking. The Contract in which any party in the agreement, at the time of execution of the agreement, cannot decide as to how much it would give or take.”

Note: Gharar in Islamic banking is discussed in more details, in the Islamic banking course and Islamic finance certification programs, which are offered by AIMS’ Islamic finance institute.

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