As far as hilah is deemed as demeaning the religion, bay alinah will not be acceptable. Apr 18, 2016 created using powtoon free sign up at create animated videos and animated presentations for free. It is used for agricultural products and other fungibles. Nursyamsiah, tita and kayadibi, saim 2012 application of bay al inah in islamic banking and finance. Use of hilah on bay alinah by the islamic financial. Issues in bay al inah and bay al dayn free download as pdf file. It can also be applied when a seller sells an asset. The contracts, structures and pricing mechanisms of sukuk. How do they work, and is there a better alternative. Bai al inah is one of the wellknown salebased contracts among islamic financial products. For example, it may involve the situation where a person has receivables and. According to some jurists, inah is defined as a sale of a commodity on credit and repurchasing it for a lesser amount in cash. Islamic personal financing is offered to cater to the needs of personal financing that complies with shariah. Conditions of bay al sarf types of bay al sarf application.
Created using powtoon free sign up at create animated videos and animated presentations for free. What is the difference bay al tawarruq and bay alinah. Exchangebased contracts in islamic finance bay al inah sale and buyback definitions of bay al inah form of bay al inah legality of bay al inah application of bay al inah in islamic finance salient shariah issues in the contemporary application of bay al inah. A user s guide to cash flows, balance sheets, and capital structures book. Nursyamsiah, tita and kayadibi, saim 2012 application of bay alinah in islamic banking and finance.
Technically dayn is defined as mal hukmi fi al zimmah or a constructive asset in the obligation of the debtor. Aqeedah refers to those matters which are believed in, with certainty and conviction, in ones heart and soul. Bay al tawarruq in the strict definition of the jurists is defined as a monetizer mustawriq who buys a merchandise at a deferred price in order to sell it in cash at a lower. Ibn rushd examines the three forms of sale that can arise in a market where goods and money are in existence. Finally, financing is only intended for goods that can be classified as finished goods. Alijarah thumma albay aitab objectives of the research. Applied shariah in financial transactions linkedin slideshare. Dr salmy edawati yaacob jabatan syariah, fakulti pengajian islam, ukm 2015 2. A seller sells an asset to a buyer on a cash basis and later buys it back on a deferred payment basis where the price is higher than the cash price. Established since 2008, al qaseer has grown to become a leader in the fast emerging property and real estate sector within the g. They are not tainted with any doubt or uncertainty. Therefore, dayn is a form of mal asset or haqq mali a financial right. A bayal inah is very similar to tawarruq, but in tawwaruq there will be a third party that is involved in this type of islamic finance as an intermediary. Nevertheless, it is a legal sale according to the shafii mazhab.
Bay al inah adalah akad jual beli dimana penjual menjual asetnya kepada pembeli dengan penjualan tunai cash sale, dengan janji untuk dibeli kembali buy back dengan pihak yang sama secara tangguh deferred payment salebba. All books are in clear copy here, and all files are secure so dont worry about it. Bai al inah sale with immediate repurchase malaysia a syariah principle involving the sale and buyback transaction of assets by a seller. In islamic finance, a sale in which delivery is deferred until some stated date in the future. Edib smolo abstract islam is a divine revelation for all people and the prophet. Al dayn is the arabic word for debt as opposed to qard loan. What is the difference bay altawarruq and bay alinah.
Definition, application in islamic banking, and some opinions about bay alinah this part elaborates the definition. There are differing opinions between middle eastern scholars and south east asian scholars, from a shariah perspective, on if a bai alinah is an acceptable financial practice. The purchaser then sells the asset to the third party on cash with a price lesser than the deferred price, for the purpose of getting cash. Bai alinah and tawaruq as a solution to interestbased. Although all the controversial issues related to bai al inah have already been discussed before by fiqh scholars, due to the. Resolution on bai inah discussions on islamic banking. According to majma fiqh al islami sale of debt to the debtor is permissible sale of debt to the 3rd party is permissible provided that there is no element of riba and gharar shariah advisory council of securities commission of malaysia bay al dayn is permissible bay al kali bi al kali is not permissible sale of debt to the debtor is permissible. Bay al inah is not found in any islamic commercial law. Bursa suq alsila, inah, liquidity management, shariah compliance. There are differing opinions between middle eastern scholars and south east asian scholars, from a shariah perspective, on if a bai alinah. Generally, an ebook can be downloaded in five minutes or less. The latter term has also been employed in pakistan. This type of contract has been applied by most of the islamic financial institutions ifi particularly in malaysia towards their islamic financial products.
Jun 19, 2012 opinion of scholars bay alinah is permissible subject to the following condition. Bai inah based portfolio used to consist of nearly 80% of the overall financing portfolio of some banks. It denotes the sale of debt securities, debt certificates commercial papers, or receivables for a specific amount usually at a discount to its face value. Hanafi, malikis and hanbalis it is a void contract as it leads to riba. A seller immediately buys back the asset he has sold on a deferred payment basis at a price higher than the original price. Pdf tawarruq as a product for financing within the islamic. Bai inah practice in malaysia 1 customer approaches the bank for. Generally, the modus operandi of inah in the current banking system is as following picture. An islamic card based on the shariah principle of bay al inah or sale with immediate repurchase. The use of bay al inah in islamic finance has been a controversial practice. Osman, mohd farihal 2007 bai al inah and tawaruq as a solution to interestbased personal financing facility. Application of bay alinah in islamic banking and finance.
Application bay alinah in islamic banking for now, only two countries which are malaysia and brunei darussalam allow bay al inah applying in their banking system. However, some jurists have ruled that bay al inah is permissible in the instance when the price of the second sale is. Bai salami arabic, more accurately transliterated as bai us salami is an islamic contract in which full payment is made in advance for specific goods often agricultural products to be delivered at a future date. Definisi istilah kontrak yang dilakukan antara penjual pemilik harta dengan pembeli untuk menjual sesuatu barang dengan. Their shariah scholars concur that majority of scholars and financial institutions prohibit inah, though wonder the issue as a kind of ijtihad personal reasoning that permits divergence of ideas. It is only expected that the term is more preferable to the government of pakistan as the hanafi school of law is also the official mazhab in pakistan. According to imam shafii, the intention is not a significant point to determine the validity of the. Tawarruq is sometimes called commodity murabaha as it involves having access to cash through the trading of a commodity in a real transaction. Another feature of bai al dayn is that only trade transactions on usance terms are allowed. Until then, bai inah still provides a quick solution to building the books of malaysian banks. In order to comply with the sharia, a salam contract must specify the quality of the good to be delivered, and payment must be made at the time the contract is entered. Pdf introduction to islamic banking products deposit. Tawarruq financial transaction islamic banking and finance.
Bai almurabaha is a contract between the buyer and the seller under which the seller sells specific goods permissible under islamic shariah and law of the land to the buyer at a cost plus agreed profit payable in cash on or before a fixed future date in lump sum or by installments or single delivery. An analysis of the classical and contemporary juristic opinions on bay al dayn pdf by hanudin amina. Islamic credit card account structure islamic credit card bai inah profit al wadiah. According to one critic, except for names and terms, the essence of both al waqf takaful and conventional insurance is the same, and as a consequence this structure has come under a lot of criticism from shariah scholars. Beginning with the concept of bay al inah, its application has undergone several strong critiques that have prompted the introduction of tawarruq. Bai salam,bai istisna and bai al inah yayasuha free download as powerpoint presentation. Bay al inah is a sale contract with immediate repurchase. It was reported that most of the financial institutions in malaysia are applying the former model of financing in their products such as bay al inah, murabahah, bay bithaman ajil, tawarruq and.
Click to read more about recent development on bai inah and issues on interconditionality in the contract of bai inah. The function of bay alinah tawarruq is a sale of an asset to a purchaser with deferred payment. A bay al inah is very similar to tawarruq, but in tawwaruq there will be a third party that is involved in this type of islamic finance as an intermediary. It is worth noting that the contract of bay bithaman ajil or al mnurabahah is instrumental in making the bay al inah transaction possible in the banking.
The bay alinah controversy in malaysian islamic banking. Even though this concept is more preferable than bay al inah, its implementation by industry players has attracted the serious concerns of. The polemic in the issue of permissibility of bay alinah is the status of hilah. It is necessary that the quality of the commodity intended to be purchased is fully specified leaving no ambiguity leading to dispute. Application the transaction of al inah must strictly follow the mechanism which is accepted by the shafie school the transacted item must not a ribawi item the buyer must receive take possession the good before selling it back to the original seller 9. It will take strong financial motivation to move away from a structure which has been working so very well in the banking space. Abdallah bin mahfudh ibn bayyah born 1935 is a mauritanian politician and professor of islamic studies at the king abdul aziz university in jeddah, saudi arabia he is a specialist in all four traditional sunni schools, with an emphasis on the maliki madhhab. Sanusi financial contracts involving use of bay alinah and bay aldayn have been extensively used in design of malaysian islamic bonds. Tariq ismail sagar is the excellent name of urdu language. Bay al sarf is a contract of exchange of money for money.
Differences between bai inah and tawarruq by nurul. Both tawarruq and inah are two different developments of murabaha. Application the transaction of alinah must strictly follow the mechanism which is accepted by the shafie school the transacted item must not a ribawi item the buyer must receive take possession the good before selling it back to the original seller 9. However, jurists have ruled that bay al inah is permissible in the instance when the price of the second sale is equal or higher than the price of the first sale. Bay al inah in the banking sector this part of the article will discuss the existing interestfree banking products in the malaysian market where the contract of bay al inah is applied. Chapter 2bai al inah we do not attempt to overwhelm the reader with a plethora of arabic words and we translate every relevant word in english for ease of selection from contracts and deals in islamic finance. Sanusi gulf sukuk pick up as idb issues, tdic mandates, reuters, september 9, 2009. Inspired by the five islamic values of sadaqah charity, ziarah travel, takaful protection, al tawfir savings and musharakah sharing, ikhwan offers a modern, progressive banking convenience that fulfils the islamic banking pledge. The majallah which is mainly a hanafibased codification refers to bba as bay almuajjal. Muhammad al syaibani inah is reprehensible makruh because it may lead to riba shafiis and zahiris it is a valid contract due to the fulfilment of the essential elements and conditions of the sale contract. The primary benefit of bai al dayn is that the customer can receive payment from. Jan 09, 2019 bai inah based portfolio used to consist of nearly 80% of the overall financing portfolio of some banks. How to be productive at home from a remote work veteran. Doc shariah issues in islamic banking muhamad badri othman.
The similar between tawarruq and bay al inah basically, tawarruq and inah has the same objective whereby the counterparty intent to acquire cash money for his need, for me it is both concept are the same either only involve two parties or four parties or might be more. Basically, bay al dayn sale of debt is a transaction that conforms to shariah under current malaysia regulation which regards the. However, if hilah is regarded as a mode to solve problems makhraj that is much needed by the people, bay alinah transaction may be acceptable. The bay alinah controversy in malaysian islamic banking by amir shaharuddin. The bay alinah controversy in malaysian islamic banking free download as pdf file. Malaysian studies second edition download credit transfer from malaysian university to germa the bay al inah controversy in malaysian islamic banking malaysian online journal of educational technology malaysian civil engineering standard method of measurement draft malaysian standard halal medical. Bai al inah and tawaruq as a solution to interestbased personal financing facility. Identify and discuss the pertinent issues of widely used islamic concept.
The sale and buyback of an asset for a higher price than that for which the seller originally sold it. Bay al istisna is defined as a contractual agreement with manufacturer to produce items with specified. Tawarruq refers to the purchase and sale of a commodity wherein three different parties are involved. Bai salam,bai istisna and bai alinah yayasuha prices. The purpose of this paper is to bay al inah which has been used directly into other financing product and sometimes it has been used with another product financing such as murabahah, bay.
The bay al inah contract is composed of two basic commercial transactions, namely al bay al mutlak cash sale and al bay s al baibithaman ajil e. Malaysian taxation malaysian taxation pdf advanced malaysian taxation advanced malaysian taxation principles and practice industrial revolution 4. The function of bay al inah tawarruq is a sale of an asset to a purchaser with deferred payment. The overwhelming majority of scholars are of the opinion that bay al inah is impermissible when the price of the second sale is lower than the first sale. Some issues of bay alinah in malaysian islamic financial. Malaysian standard iso 50001 malaysian standard ms 1480 malaysian studies second edition malaysian studies second edition download the bay al inah controversy in malaysian islamic banking credit transfer from malaysian university to. Differences between bai inah and tawarruq by nurul aqila. Opinion of scholars bay alinah is permissible subject to the following condition. The application of bay al inah and bay al dayn in malayisan islamic bonds.