What is Bal Al Inah?

Bay’ al-Inah is a sale contract with immediate repurchase. It takes place when a person sells an asset in credit and immediately buys back the asset in cash at lower price. The classical jurists were in disagreement in assessing the legality of the contract.

What is the main difference between Al Inah and Tawarruq?

The transaction using Bai’Al-Inah and Tawarruq has several differences. The Bai’Al-Inah involves two (2) parties in completing each transaction whereas the Tawarruq involves three (3) parties. The purpose of Bai’ Al-Inah and Tawarruq are the same but the way the Hilah is practices is different.

Why Bai al Inah is not allowed according to Shariah?

Therefore, most of Islamic jurists forbid bai’ al-‘inah due to loaning intention between the seller and buyer. As we can figure out that both parties is not at the first place have intention to do selling, but they are looking for getting cash and involve in loaning deeds.

Is Bai Inah permissible in Malaysia?

New rules published by Malaysia’s Securities Commission this month do not ban bai inah, but they stress that the two legs of the transaction must be executed and completed separately, and that ownership of the asset must actually be transferred.

What is Tawarruq concept?

Tawarruq is a financing arrangement where customer will be receiving cash at the end of it for his needs through a series of sale transactions. How Tawarruq is done? The bank will purchase commodities from a supplier (first sale) and sells them to customer (second sale).

What is Bay Al Tawarruq?

As a financial term, bay’ al-tawarruq refers to muamalah business transactions which involve two stages of business. In its first stage, business is conducted where a purchase on credit is made between the buyer and the original seller of an asset.

Why is Tawarruq prohibited?

This is Haram because it is a trick aimed at getting around the prohibition on Riba’ (Yusri and Abdurrahman, no year). the legal maxim, Tawarruq is useful to provide liquidity to those who needs money immediately.

What is Al Bai Bithaman Ajil?

Exchange Contract Bai’ Bithaman Ajil (BBA) refers to a sale and purchase transaction of an asset to be paid on later date (deferred payment) based on a price, which include a profit margin agreed to by both contracting parties.

What is Ijarah Thumma Al Bai?

Al-Ijarah Thumma Al-Bai’ (AITAB) is a Syariah-compliant car financing based on the principles to lease (Ijarah) followed by sale (Al-Bai’). Upon expiry of the leasing period, the customer has the option to purchase the asset from the TCAPM at an agreed price.

What is the difference between Murabaha and Tawarruq?

Is Tawarruq a Murabaha? Tawarruq is the whole financing arrangement to get cash whereas Murabaha is the most common sale contract used between the Bank and the customer (second sale).

What is Tawarruq deposit?

Savings Account-i / Current Account-i (Tawarruq) is a upfront fixed rate deposit account based on the Shariah compliant structure of Tawarruq. It is designed to offer a fixed return to depositors and they will receive the profit on monthly basis.

Is Tawarruq permissible?

Tawarruq is permissible than organized Tawarruq in Tawarruq transaction. officially endorsed as a permissible instrument to be used in financial market especially for personal financing by the Shariah Advisory Council of Bank Negara Malaysia (BNM) on 28 July 2005 (Dusuki, 2007). Shariah Compliant Finance”.

How does Bai al inah work in Islamic finance?

An Islamic finance technique used to provide financing to borrowers on terms compliant with Sharia. In a bai al inah transaction, a lender sells an asset to a buyer (the borrower) on credit for a fixed price (the loan amount) plus a profit element (analogous to the interest amount in a conventional finance transaction).

What is the definition of Bay al inah?

BAY’ AL-INAH  f CONCEPT DEFINITION • Literally: Sale and Buy back • Technically: It is a financing contract which involves the sale and buys back transaction of an asset by a seller.

Why is the Bai Inah contract in Malaysia controversial?

One of the most controversial contracts that resides in Malaysia is the Bai Inah contract. For many years, Malaysia have been taking heat on its use from international forums. The major reasons for this critique is that Bai Inah, while having an underlying transaction in its structure, argues critics, smells suspiciously like a loan with interest.

What is the concept of darurah in Bai Inah?

The concept of darurah is practiced for the contract of Bai Inah while a viable replacement contract is introduced to suit the customer’s requirements. The replacement contract is to be developed sooner rather than later to facilitate the migration of personal financing to a more acceptable contract. What is Bai-Inah?