Shariah Issues in Islamic Banking : Bay Al-Inah, Tawarruq and Wa’d

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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
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In Malaysia, the practice of Inah may take 2 names, depending on the original owner of the asset. If the asset to be used belongs to the customer, the contract is known as Bay Bithaman Ajil (BBA). If the asset belongs to the bank, then the contract will be named as Bay al-Inah. even though the legal documents may differ from one financing to the another, but the common documentation will consist of Property Purchase Agreement (PPA) and Property Sale Agreement (PSA). Besides, the Master Facility Agreement will also be prepared to encapsulate and detail out all necessary ingredients of the facility granted. These documents reveals that though the two sale contracts are executed separately without making one of them conditional to the other, the master facility Agreement has clearly indicated the intention of the parties in entering into these two consecutive sale contracts.

LEGITIMACY OF BAY AL-INAH The main proponents of Bay al-Inah is the Shafii school. The Shafii jurists have illustrate their permissibility in a situation whereby a person sells a commodity on cash or credit terms and hands over possession, and the parties separate with mutual pleasure about the contract, it is permissible for him to purchase it from the previous buyer for an amount equal to, higher, or lower than the former price, of the same currency as before or different, paying cash or

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