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Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
Bay' al-Sarf
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Bay' al-Sarf

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  • 1. MAHYUDDIN KHALID  emkay@salam.uitm.edu.my
  • 2. CONTENT  DEFINITION DEFINITION  EVIDENCES EVIDENCES  PILLARS OF BAY AL-SARF  CONDITIONS OF BAY AL-SARF PILLARS  OPINION OF SCHOLARSCONDITIONS  MODERN APPLICATION OPINION OF SCHOLARSAPPLICATION 2
  • 3. DEFINITION  Literal: DEFINITION  sale and purchase of money for money including gold and silver EVIDENCES  Technical: PILLARS  Sale of money for money such as the sale of gold-for- gold or silver-for-silver.CONDITIONS  Maliki scholars considers money exchange only if the sale of gold-for-gold or silver-for-silver but gold OPINION OF SCHOLARS for silver does not belong to such transactions.  Bay‟ al-sarf is a sale of something that is price in itsAPPLICATION own nature for something which is also a price.  It is regarded, as the sale of price for price and each price is a consideration for the other. 3
  • 4. EVIDENCE  Hadith: DEFINITION  Ubadah ibn Samit narrated that Rasulullah (s.a.w) said that: “Gold for gold, silver for silver, wheat for wheat, EVIDENCES barley for barley, dates for dates, and salt for salt, should be exchange like for like, equal for equal and PILLARS hand-to-hand. If the types of exchanged commodities are different, then sell them as you wish, if they areCONDITIONS exchanged on the basis of hand-to-hand transaction.”  Narrated by Muslim OPINION OF SCHOLARS  Ijma‟  All Islamic scholars unanimously agree on theAPPLICATION permissibility of bay‟ al-sarf as it has been practice by the people since the time of Prophet (s.a.w) until now without any objections. 4
  • 5. PILLARS OF BAY’ AL-SARF  Seller and buyer DEFINITION  Merchandise/goods EVIDENCES  Price  Sighah PILLARSCONDITIONS OPINION OF SCHOLARSAPPLICATION 5
  • 6. CONDITIONS OF BAY’ AL-SARF DEFINITION Taking possession before leaving one another • It is necessary that both the things exchanged shall be taken EVIDENCES possession before the separation of the parties. • This is because departing with debts on both sides is not PILLARS permitted as it is regarded as sale of debt against debt (bay‟ al-kali‟ bi al-kali) which is prohibited.CONDITIONS Equal for equal transaction OPINION OF • There can be no credit or postponement of delivery. The SCHOLARS principle concerning money is that it cannot be sold or bought on credit.APPLICATION • If the currency trading involves the exchange of currencies of the same genus such as silver for silver or gold for gold, they must be transacted in like-for-like even if they differ in quality since consideration is given only to quantity. 6
  • 7. CONDITIONS OF BAY’ AL-SARF DEFINITION Freedom from khiyar syarat • An option of condition cannot be stipulated. One of the EVIDENCES contracting parties may stipulate certain conditions which if not met would grant a legal right to the stipulating PILLARS party to rescind the contract. • However, khiyar „aib (option of defect) is allowed.CONDITIONS Non deferment OPINION OF SCHOLARS • Delivery of both counter values should not be deferred to a certain point of time in the future.APPLICATION • If one of the parties stipulated a deferment in the receipt of one of the currencies, the contract is rendered null and void as it has been prescribed that exchanges of goods eligible for riba should be on a hand-to-hand basis. 7
  • 8. BAY’ AL-SARF CONCEPT OF ON FOREX  Spot Basis DEFINITION  Practice based on urf (customs) EVIDENCES  An exchange between items which are the same such as currencies with currencies. By using analogy on the hadith, majority of fuqaha‟ agree that all forms of PILLARS currency should obey the rules established for gold and silver exchangesCONDITIONS  A consensus among Islamic jurists on the view that OPINION OF currencies of different countries can be exchanged on a SCHOLARS spot basis at a rate different from unity, since currencies of different countries are distinct entities with differentAPPLICATION values or intrinsic worth, and purchasing power. 8
  • 9. BAY’ AL-SARF CONCEPT OF ON FOREX  Forward Basis DEFINITION  In general, majority of scholars on the view that currency exchange on a forward basis is not EVIDENCES permissible, that is, when the rights and obligations of both parties relate to a future date. PILLARS  However, recently the IFI practice bay al-sarf based on waad (promise) or murabahah commodityCONDITIONS 1. Waad based using unilateral promise  The customer promise to purchase/ sell foreign currency with a bank. OPINION OF SCHOLARS  A who is looking for a hedge will provide an undertaking to buy a currency from B in the future. A is bound to fulfill its promise to B however B is not under any obligation to act onAPPLICATION the transaction when an offer of purchase is submitted.  Essential elements of the promise include the purchase price of the currency and the delivery date. The promise must not be conditional on any event. 9
  • 10. BAY’ AL-SARF CONCEPT OF ON FOREX 2. Murabahah commodity based DEFINITION  Customer and bank enter into two separate murabahah transaction to facilitate forward foreign exchange contract. EVIDENCES  Customer will buy commodity for spot value and sell it to the bank for purchase price plus agreed profit payable on deferred basis. PILLARS  The bank will buy another commodity and sell it to the customer again for the purchase price plus agreed profit onCONDITIONS deferred basis to address the other side of the forward deal.  Both the customer and the bank typically will sell the OPINION OF commodity back to the market to recover their initial SCHOLARS investment.APPLICATION 10
  • 11. APPLICATION  Bay‟ al-sarf is applicable to modern spot forex DEFINITION which is based on the spot rate which the deal settlement is expected to be completed shortly after EVIDENCES the contract has been executed. PILLARS  Majority of scholars opine that different currencies of different countries consist of different intrinsicCONDITIONS values and purchasing power.  There are several IFI offer products construct using OPINION OF SCHOLARS bay al-sarf such as:  Gold investment savings accountAPPLICATION  Shariah compliant forex investment product 11
  • 12. END OF CHAPTER DEFINITION EVIDENCES PILLARSCONDITIONS  OPINION OF SCHOLARSAPPLICATION 12

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