Shariah Issues in Islamic Banking : Bay Al-Inah, Tawarruq and Wa’d
Abstract
The rising of the Islamic banking and finance industry is a direct response to the growing awareness amongst Muslim regarding the need of alternative financial products and services that is complied with the teaching of Islam. To be specifically, the demand is based on the avoidance of the element of Riba which is widely and fundamentally practiced in the conventional banking industry. The attempt by the Islamic banking and finance industry had so far been successful and it could be witnessed by the launching of wide range of Shariah compliant financial products and transaction. However, none of us can guarantee that the Shariah compliant products approved are fault-free absolutely. Among the practices of the industry, the practice of Bay al-Inah or the practice of sale and buy-back, Tawarruq which quite commonly used in Malaysia, have been criticized strongly especially the voices from the Middle East. The other issue that will be discussed briefly in this project paper is the applicability of Wa’d , the unilateral promise.
Key terms of the research
1 Bay al-Inah 2 Tawarruq 3 Wa’d 4 Al Ijarah al Muntahiya Bittamleek 5 Statutory Declaration
Objectives of the research:
Identify the issues of the Bay al-Inah , Tawarruq and Wa’d encountered by the Islamic banking industry and proposal of an alternative solution to it.
Table of content
GENERAL INTRODUCTION
SHARIAH ISSUE ONE: Bay al-Inah
• The Concept
• Current Practise of the Industry
• Legitimacy of the Bay al-Inah
• Alternative Solution
SHARIAH ISSUE TWO: Tawarruq
• The Concept
• Current Practise of the Industry
• Legitimacy of the Tawarruq
• Alternative Solution
SHARIAH ISSUE THREE: Wa’d
• The Concept
• Legitimacy of Wa’d
• Solution
CONCLUSION
REFERENCES
GENERAL INTRODUCTION
The rising of the Islamic banking and finance industry is a direct response to the growing awareness amongst Muslim regarding the need of alternative financial products and services that is complied with the teaching of
The rising of the Islamic banking and finance industry is a direct response to the growing awareness amongst Muslim regarding the need of alternative financial products and services that is complied with the teaching of Islam. To be specifically, the demand is based on the avoidance of the element of Riba which is widely and fundamentally practiced in the conventional banking industry. The attempt by the Islamic banking and finance industry had so far been successful and it could be witnessed by the launching of wide range of Shariah compliant financial products and transaction. However, none of us can guarantee that the Shariah compliant products approved are fault-free absolutely. Among the practices of the industry, the practice of Bay al-Inah or the practice of sale and buy-back, Tawarruq which quite commonly used in Malaysia, have been criticized strongly especially the voices from the Middle East. The other issue that will be discussed briefly in this project paper is the applicability of Wa’d , the unilateral promise.
Key terms of the research
1 Bay al-Inah 2 Tawarruq 3 Wa’d 4 Al Ijarah al Muntahiya Bittamleek 5 Statutory Declaration
Objectives of the research:
Identify the issues of the Bay al-Inah , Tawarruq and Wa’d encountered by the Islamic banking industry and proposal of an alternative solution to it.
Table of content
GENERAL INTRODUCTION
SHARIAH ISSUE ONE: Bay al-Inah
• The Concept
• Current Practise of the Industry
• Legitimacy of the Bay al-Inah
• Alternative Solution
SHARIAH ISSUE TWO: Tawarruq
• The Concept
• Current Practise of the Industry
• Legitimacy of the Tawarruq
• Alternative Solution
SHARIAH ISSUE THREE: Wa’d
• The Concept
• Legitimacy of Wa’d
• Solution
CONCLUSION
REFERENCES
GENERAL INTRODUCTION
The rising of the Islamic banking and finance industry is a direct response to the growing awareness amongst Muslim regarding the need of alternative financial products and services that is complied with the teaching of
References: A: Book Dr. Muhammad Saleem (2005), Islamic Banking- Observation and Arguments on Riba (interest or usury), Islamic Banking Practices, Venture Capital and Enlightenment, published by Xlibris Corporation, p26. Professor Rafic Yunus Al-Masri (2002), The Binding Unilateral Promise (Wa’d) in Islamic Banking Operations: Is it Permissible for a Unilateral Promise (Wa’d) to be Binding as an Alternative to a Proscribed Contract? , J.KAU: Islamic Econ, Vol 15: pg29-33 Dr. Mohamad Akram Laldin, The Concept of Promise and Bilateral Promise in Financial Contracts: A Fiqhi Perspective, The International Shariah Research Academy (ISRA), pg 3-30 Muhammad Abd al Ghaffar, al Tatbiqat al Masrafiyyah li al Tawarruq, pg 16 SH1003: Shariah Rules in Financial Transactions of CIFP Module 2012, published by the International Centre for Education in Islamic Finance (INCEIF), pg 97- 129 Dr. Mohd Daud Bakar and Dr. Engku Rabiah Adawiah Engku Ali (2008), Essential Readings In Islamic Finance, CERT Publications Sdn Bhd: pg 133-165 http://www.isra.my/media-centre/downloads/finish/7-islamic-banking/273-the-concept-of-promise-and-bilateral-promise-in-financial-contracts-a-fiqhi-perspective-english/0.html retrieved 17/11/2012 20.00pm http://dahabshilbank.com/cms.php?id=ijarah_en& retrieved 16/11/2012 16.00pm