2. CONTENT
DEFINITION
DEFINITION
EVIDENCES
EVIDENCES PILLARS OF BAY AL-’INAH
CONDITIONS OF BAY AL-’INAH
PILLARS
OPINION OF SCHOLARS
OPINION OF MODERN APPLICATION
SCHOLARS
APPLICATION
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3. DEFINITION
Literal:
DEFINITION
Loan or advanced payment
EVIDENCES Technical:
The selling of an asset with a mark up price on deferred
PILLARS payment, with the intention to sell the same asset to the
debtor with lower cash price, which is meant to settle
OPINION OF his debt.
SCHOLARS
APPLICATION
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4. DEFINITION
Imam al-Shafii:
DEFINITION
It is a credit purchase of an asset which is later sold to the
original owner or a third party, whether at a deferred or spot
EVIDENCES , higher or lower price than the first contract, or for an
exchange of goods.
PILLARS Ibn Qudamah:
It is a sale of an asset with a deferred price, and buys back the
OPINION OF
SCHOLARS
same asset at a lower price.
It is a bargaining (musawamah) sale and purchase
APPLICATION contract i.e. without disclosing or referring to what the
cost price is.
Bay` al-`Inah conceptually refers to a sale of an asset,
which is later repurchased at a different price, whereby
the deferred price is higher than the cash price.
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5. EVIDENCES
Hadith:
DEFINITION
Rasulullah (s.a.w) has ordered Amru ibn
EVIDENCES al As to prepare the army for the battle.
He then purchased a camel in exchange
PILLARS
for a delayed payment of 2 camels
OPINION OF
SCHOLARS
Narrated by al-Bukhari
APPLICATION
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6. EVIDENCES
Muslim scholars:
DEFINITION
Permissible based on analogy, the contract is similar to
other sale and purchase contracts i.e. the transfer of
EVIDENCES
ownership is taken place.
The majority view that such a sale is forbidden. They
PILLARS
are Hanafis, Malikis, Hanbalis and some Shafi’is.
OPINION OF Imam Shafi’i, Abu Yusuf, Abu Daud and Abu Thur are
SCHOLARS of the view that this contract of sale is not contrary to
Shariah principles.
APPLICATION
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7. PILLARS OF BAY’ AL-’INAH
Seller and buyer
DEFINITION
Merchandise/goods
EVIDENCES Price
Sighah
PILLARS
OPINION OF
SCHOLARS
APPLICATION
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8. FLOWS OF BAY’ AL-’INAH
DEFINITION 3)Pay cash money
EVIDENCES Price
PILLARS
A B
OPINION OF
SCHOLARS 1) Sell Asset 2) Buy back Asset
in deferred in cash
payment
APPLICATION
Asset
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9. CONDITIONS OF BAY’ AL-’INAH
Shariah Advisory Council of Bank Negara Malaysia
DEFINITION resolved that bay’ al-'inah is still necessary in
Malaysian context.
EVIDENCES
However market player are required to strengthen
and enhance their operational process and
PILLARS documentation to comply with the features of bay’
al-'inah permitted.
OPINION OF
SCHOLARS Bay’ al-'inah is permissible subject to the following
condition:
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
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10. OPINION OF SCHOLARS
Scholars are divided into two group:
DEFINITION
1. Those that prohibit
Majority of the scholar including Hanafi, Maliki and
EVIDENCES
Hanbali prohibit al-’inah transaction
The same result adopted by the Shariah council of AAOIFI
PILLARS
and majority of Shariah Advisory Council in Malaysia and
Brunei
OPINION OF
SCHOLARS 2. Those that permit
Includes Imam Shafie and supported by Ibn Hazm and
APPLICATION Shariah Advisory Council of Bank Negara Malaysia
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11. JUSTIFICATION OF THOSE THAT PROHIBIT
It is hilah to riba
DEFINITION
The underlying issue on bay’ al-'inah is the
difference between the muqtada al-’aqd and the
EVIDENCES
actual motive of the contracting parties, whether to
have a real contract of sale or as hilah for liquidity
PILLARS or monetary purposes.
OPINION OF The polemic in the issue of permissibility of bay’ al-
SCHOLARS 'inah is the status of hilah.
APPLICATION
As far as hilah is deemed as demeaning the religion,
bay’ al-'inah will not be acceptable.
However, if hilah is regarded as a mode to solve
problems (makhraj) that is much needed by the
people, bay’ al-'inah transaction may be acceptable.
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12. JUSTIFICATION OF THOSE THAT PERMIT
Shafii approved bay’ al-’'inah as financing mode
DEFINITION
A sale which is followed by a subsequent sale but
EVIDENCES
without any intention to have al-’'inah arrangement.
Al-’Inah that involves two contracts of sale in which
PILLARS the price of each contract (either cash or deferred) is
similar to the other.
OPINION OF
SCHOLARS Al-’Inah which is concluded on an asset with a gap
of time between the two contracts, the purchase and
APPLICATION
sale contracts.
Al-’Inah which is concluded on an asset which has
changed in certain aspect.
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13. APPLICATION
Bay’ al-'inah has been used to construct numerous
DEFINITION
financing product offered by the bank in Malaysia:
Personnel financing
EVIDENCES
Working Capital Financing
PILLARS Istisna’ between 2 parties
BBA financing products
OPINION OF
SCHOLARS Islamic credit card
Sukuk BBA
APPLICATION
Sukuk Murabahah
Islamic Overdraft
Murabahah Trade Financing
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14. END OF CHAPTER
DEFINITION
EVIDENCES
PILLARS
OPINION OF
SCHOLARS
APPLICATION
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