Bai ( buying & selling )


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AlHuda CIBE,

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Bai ( buying & selling )

  1. 2. <ul><li>Bai ( Buying & Selling) Trade Base Mode of Islamic Banking </li></ul>
  2. 3. PRODUCT TREE Islamic Banking Modes Trade Based Modes Partnership Based Modes Rental Based Modes <ul><li>Musharaka </li></ul><ul><li>(Joint Venture Profit Sharing ) </li></ul><ul><li>Mudaraba </li></ul><ul><li>( Trustee Profit Sharing) </li></ul><ul><li>Murabaha </li></ul><ul><li>(Cost Plus Profit Sale) </li></ul><ul><li>Musawama </li></ul><ul><li>(Bargain sale ) </li></ul><ul><li>Salam </li></ul><ul><li>(Commodity Sale) </li></ul><ul><li>Istisna </li></ul><ul><li>(Sale on Order) </li></ul><ul><li>Ijarah </li></ul><ul><li>( Leasing ) </li></ul><ul><li>Diminishing </li></ul><ul><li>Musharaka </li></ul><ul><li>( Transfer of Ownership) </li></ul>
  3. 4. Basic Rules of Bai <ul><li>Existence of Product/Commodity </li></ul><ul><li>Ownership of Product/Commodity </li></ul><ul><li>Possession of Product/Commodity </li></ul>
  4. 5. Basic Rules of Bai <ul><li>Unconditional basis </li></ul><ul><li>Product have value/Price. </li></ul><ul><li>Bai on Such product which is permissible in Islam. </li></ul>
  5. 6. Basic Rules of Bai <ul><li>Product Must be Identify, clear with all demanding Qualities. </li></ul><ul><li>Not based on any incident, struggle etc </li></ul><ul><li>Price must be clearly identified. </li></ul>
  6. 7. Bai (Buying & Selling) <ul><li>Basic Kinds of Bai </li></ul>
  7. 8. Kinds of Bai <ul><li>Bai Musawamah </li></ul><ul><li>Bai Murabaha </li></ul><ul><li>Bai Surf </li></ul><ul><li>Bai Salam </li></ul><ul><li>Bai Istisna’ </li></ul><ul><li>Bai Urboon </li></ul>
  8. 9. Basic Kinds of Bai <ul><li>Bai Eenna </li></ul><ul><li>Bai Touliya </li></ul><ul><li>Bai Wadhia </li></ul>
  9. 10. Bai <ul><li>There are three basic type of Bai’s which are using in Islamic Banking as the mode of financing in Pakistan </li></ul><ul><li>Murabahah </li></ul><ul><li>Salam </li></ul><ul><li>Istisna’ </li></ul>
  10. 11. Murabahah <ul><li>Basically, it’s not a mode of financing but a source to avoid interest Dealing </li></ul><ul><li>It’s not a type of loan, but a deal (Bai) </li></ul><ul><li>Murabahah can be used as source of financing when client needs funds to purchase any product/Machinery etc. </li></ul>
  11. 12. Murabahah <ul><li>Sharing of Risk of loss differentiate Murabahah from the interest category </li></ul><ul><li>Product Must be bought from third party for avoid buy back transaction </li></ul><ul><li>Roll over is not Valid in Murabahah </li></ul><ul><li>If actual cost can not be identified then Murabahah deal not possible. </li></ul>
  12. 13. Bai <ul><li>Important Note </li></ul><ul><li>Following 3 Basic Rules of Bai are exceptional for Salam & Istisna’ </li></ul><ul><li>Existence of Product/Commodity </li></ul><ul><li>Ownership of Product/Commodity </li></ul><ul><li>Possession of Product/Commodity </li></ul>
  13. 14. Salam <ul><li>Pay 100% amount in Advance. </li></ul><ul><li>Product must be quantified, identified and Measured with quality. </li></ul><ul><li>Date of delivery, Time, Place must be mentioned clearly in advance. </li></ul><ul><li>Salam is not valid for a specific farm/land/garden. </li></ul>
  14. 15. Istisna’ <ul><li>Not necessary to pay the 100% amount in advance Like Bai salam. </li></ul><ul><li>Price must be decided on beginning of the contract. </li></ul><ul><li>Qualities, features of that product must be clearly identified. </li></ul>
  15. 16. Bai <ul><li>Differences Between Istisna and Salam </li></ul>
  16. 17. Differences Between Istisna and Salam <ul><li>Istisna deal with manufacturing items, but Salam could or could not be manufacutred, but salam ideal of agriculture sector. </li></ul><ul><li>In salam advance payment is necessary, but in Istisna’ its not. </li></ul>
  17. 18. Differences Between Istisna and Salam <ul><li>Date, time of delivery the necessary part of Bai Salam, But in Istisna, it is not the part of the deal. </li></ul><ul><li>In Bai salam, it can be cancelled one sided, but in Istisna, it could be cancelled, if production is not started yet. </li></ul>
  18. 19. Type of Bai according to Quality <ul><li>Bai Salah </li></ul><ul><li>Bai Fasid </li></ul><ul><li>Bai Batil </li></ul><ul><li>Bai Maqoof </li></ul>
  19. 20. Type of Bai according to Quality <ul><li>Bai Majool </li></ul><ul><li>Bai Muqayaddah </li></ul><ul><li>Bai Mu’ajal </li></ul>
  20. 21. <ul><li>Thank you </li></ul>
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