Tawarruq personal financing using Bursa Suq Al Sila'

1. Tawarruq Personal Financing
using Bursa Suq Al-sila
Presentation by:
Nor Hafizah binti Samanal

2. Content
Meaning of Tawarruq
Modus operandi
Type of Tawarruq
Opinions regarding Tawarruq
Issues on Tawarruq
Challenge on Tawarruq
Meaning of Bursa Suq Al-sila’
Industry Banking Product
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3. Meaning of Tawarruq
 The term tawarruq is derived from root
word al-wariq
 Buying a commodity with a deferred
payment and selling it to a person other
than the buyer for a lower price with
immediate payment.
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4. Modus operandi of Tawarruq
Commodity
seller
(muwarriq)
Commodity
buyer
Customer
(mutawarriq)
BANK A
2) Sale for deferred
payment RM 110 mil
3) Sale for
immediate
payment
Sale RM 100 mil
Cost RM 110 mil
1) Sale for
immediate
payment
RM 100 mil
Source 1: Money, Islamic Bank and Real Economy (2010)
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5. Modus operandi of Tawarruq
2
C
U
S
T
O
M
E
R BROKER B
BROKER A
B
A
N
K
1
3
5
4
2
6
MuwarriqMutawarriq

6. Type of Tawarruq
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7. Opinions regarding Tawarruq
 Hanbali and many scholar - Permitted.
 Ibnu Taimiah and Ibnu al-Qayyim – Prohibited.
 Imam Ahmad bin Hanbal – Makruh.
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8.  Issues pertaining to Commodity
 Issues pertaining to possession and delivery
 Issues pertaining to Bay al-Inah
 Issues pertaining to Agency
Issues on Tawarruq
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9.  The wide usage of tawarruq increasing of debt
and embodies many risks and harmful effect.
 Debt as an individual transaction is not illegal
from Shariah point of view. But, from a macro
perspective it has been an accepted.
 Priority is given to public interest (Maslahah
ammah) over individual interest (maslahah
khassah)
Opportunities or challenge
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10. 4/1 The requirements of the contract for purchasing
the commodity on a deferred basis should be
completely fulfilled
4/2 The commodity sold should be well identified.
4/3 If the commodity is not made available at the time
signing contract, the client should be given a full
description when the commodity is not available.
The AAOIFI’s Shariah Parameters
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11. Bursa Suq Al-sila’
 An Islamic commodity trading platform for the
Islamic financial and capital market.
 Designed to serve as a multi-commodity and multi-
currency platform, initially with trading of CPO
(crude palm oil) to serve the Malaysian market.
 Shariah-compliant on end-to-end basis & designed
to be in line with International Shariah standards.
 Trading platform is fully electronic and web-based;
access is via internet with multiple security
features.
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12. Specification of BSAS
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Specification Parameters
Contract code CM-CPO
Settlement Delivery of CPO (with provision for cash
settlement)
Contract grade &
delivery point
Free Fatty Acid (FFA) of palm oil delivered
into the tank ≤ 4% and the tank ≤ 5%.
Trading Session Mon-Thurs : 10.30 a.m – 6 p.m
Friday
1st : 10.30 a.m – 12.30 p.m
2nd : 2.30 p.m – 6 p.m

13. Industry Banking Product
 Personal financing
 Asset financing
 Cash line facility contract financing
 Home financing
 Project financing facilities
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14. Q & A
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