Bay' al-'Inah

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Bay' al-'Inah

  1. 1. MAHYUDDIN KHALID  emkay@salam.uitm.edu.my
  2. 2. CONTENT  DEFINITION DEFINITION  EVIDENCES EVIDENCES  PILLARS OF BAY AL-’INAH  CONDITIONS OF BAY AL-’INAH PILLARS  OPINION OF SCHOLARS OPINION OF  MODERN APPLICATION SCHOLARSAPPLICATION 2
  3. 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. SCHOLARSAPPLICATION 3
  4. 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 purchaseAPPLICATION 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. 4
  5. 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-BukhariAPPLICATION 5
  6. 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 6
  7. 7. PILLARS OF BAY’ AL-’INAH  Seller and buyer DEFINITION  Merchandise/goods EVIDENCES  Price  Sighah PILLARS OPINION OF SCHOLARSAPPLICATION 7
  8. 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 paymentAPPLICATION Asset 8
  9. 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 9
  10. 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 andAPPLICATION Shariah Advisory Council of Bank Negara Malaysia 10
  11. 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. 11
  12. 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 andAPPLICATION sale contracts.  Al-’Inah which is concluded on an asset which has changed in certain aspect. 12
  13. 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 BBAAPPLICATION  Sukuk Murabahah  Islamic Overdraft  Murabahah Trade Financing 13
  14. 14. END OF CHAPTER DEFINITION EVIDENCES PILLARS OPINION OF SCHOLARS APPLICATION 14

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