•Literally : Sale and purchase of money formoney including gold and silver.• Technically : Sale of money such as the sale ofgold-for gold or silver-for-silver.
• Maliki scholars considers money exchangeonly if the sale of gold-for-gold or silver-for-silver but gold for silver does not belong tosuch transactions.• Bay’ al-sarf is a sale of something that is pricein its own nature for something which is also aprice.• It is regarded, as the sale of price for price andeach price is a consideration for the other.
• Hadith:– Ubadah ibn Samit narrated that Rasulullah (s.a.w) saidthat: “Gold for gold, silver for silver, wheat forwheat, barley for barley, dates for dates, and salt forsalt, should be exchange like for like, equal for equaland hand-to-hand. If the types of exchangedcommodities are different, then sell them as youwish, if they are exchanged on the basis of hand-to-hand transaction.”• Narrated by Muslim• Ijma’– All Islamic scholars unanimously agree on thepermissibility of bay’ al-sarf as it has been practice bythe people since the time of Prophet (s.a.w) until nowwithout any objections.
Taking possession before leaving one another• It is necessary that both the things exchanged shall be takenpossession before the separation of the parties.• This is because departing with debts on both sides is not permittedas it is regarded as sale of debt against debt (bay’ al-kali’ bi al-kali)which is prohibited.Equal for equal transaction• There can be no credit or postponement of delivery. The principleconcerning money is that it cannot be sold or bought on credit.• If the currency trading involves the exchange of currencies of thesame genus such as silver for silver or gold for gold, they must betransacted in like-for-like even if they differ in quality sinceconsideration is given only to quantity.CONDITIONS OF BAY’ AL-SARF
Freedom from khiyar syarat• An option of condition cannot be stipulated. One of thecontracting parties may stipulate certain conditions which ifnot met would grant a legal right to the stipulating party torescind the contract.• However, khiyar ‘aib (option of defect) is allowed.Non deferment• Delivery of both counter values should not be deferred to acertain point of time in the future.• If one of the parties stipulated a deferment in the receipt ofone of the currencies, the contract is rendered null and voidas it has been prescribed that exchanges of goods eligiblefor riba should be on a hand-to-hand basis.
• Bay’ al-sarf is applicable to modern spot forexwhich is based on the spot rate which the dealsettlement is expected to be completed shortlyafter the contract has been executed.• Majority of scholars opine that differentcurrencies of different countries consist ofdifferent intrinsic values and purchasing power.• There are several IFI offer products constructusing bay al-sarf such as:– Gold investment savings account– Shariah compliant forex investment product
Literally : Ijarah came from the root word whichmeans compensation or . It also means the sale ofusufruct.Technically : A contract of proposed and knownusufruct with a specified and lawful return orcompensation for the effort or work which has beenexpended~It is used to express the sale (bay’) of a knownbenefit in return for its known equivalent.Al-Ijarah
• Al Ijarah means leasing. As in a normal leasetransaction, a lessor who owns the leasedasset will lease it to the lessee in exchange forrental. The lessee will get the full benefit ofusing the lease asset within the specifiedperiod for as long as he adheres to the leaseterms and conditions. At the end of the leaseperiod, the leased asset will be returned tothe lessor.
Nature of al-Ijarah Lease is a contract by which the owner of land, a buildingallows another person to use it for a specific time, usuallyin return for a rent Al-Ijarah means a lease contract as well as a hire contract. Al-Ijarah, is also known as al-Kira‟. It is like someone who isselling to someone else a right to benefit or as a paymentfor services with a certain price to be paid for it.• In the context of Islamic banking it is a lease contract underwhich the bank or financial institution leases equipment ora building to one of its clients against a fixed charge