Classical tawarruq: A potential alternative to bai al-īnah in the malaysian banking and finance industries

Amir Fazlim Yusoff, Azlin Alisa Ahmad, Nik Abdul Rahim Nik Abdul Ghani

Research output: Contribution to journalReview article

Abstract

International Islamic religious authorities have commented negatively on the application of bai al-īnah (same-item sale-repurchase) in the Malaysian banking industry. These authorities include the Islamic Fiqh Academy of the Organisation of Islamic Cooperation (OIC) and Accounting and the Auditing Organisation for Islamic Financial Institutions (AAOIFI). They conclude that the application represents a prohibited ruse to legitimise usury through a sale transaction. This article examines the possible use of classical tawarruq as an alternative to bai al-īnah in the Malaysian banking industry, especially for retail financing. Several modes of classical tawarruq are considered. This research supports the application of classical tawarruq as an effective, viable and marketable Islamic financing arrangement. Keywords

Original languageEnglish
Pages (from-to)400-419
Number of pages20
JournalArab Law Quarterly
Volume33
Issue number4
DOIs
Publication statusPublished - 1 Jan 2019

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Keywords

  • Bai al-īnah
  • Commodity murābaah
  • Islamic finance
  • Monetisation
  • Same-item sale-repurchase
  • Tawarruq

ASJC Scopus subject areas

  • Law

Cite this

Classical tawarruq : A potential alternative to bai al-īnah in the malaysian banking and finance industries. / Yusoff, Amir Fazlim; Ahmad, Azlin Alisa; Nik Abdul Ghani, Nik Abdul Rahim.

In: Arab Law Quarterly, Vol. 33, No. 4, 01.01.2019, p. 400-419.

Research output: Contribution to journalReview article

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