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BAY' AL-INAH

VIEWS: 105 PAGES: 14

									MAHYUDDIN KHALID      emkay@salam.uitm.edu.my
                             CONTENT
               DEFINITION
 DEFINITION
               EVIDENCES
  EVIDENCES    PILLARS OF BAY AL-’INAH
               CONDITIONS OF BAY AL-’INAH
    PILLARS
               OPINION OF SCHOLARS
 OPINION OF    MODERN APPLICATION
  SCHOLARS


APPLICATION




    2
                                   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.
  SCHOLARS


APPLICATION




    3
                                     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 purchase
APPLICATION     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
                              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-Bukhari

APPLICATION




    5
                                   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




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                      PILLARS OF BAY’ AL-’INAH
               Seller and buyer
 DEFINITION
               Merchandise/goods
  EVIDENCES    Price
               Sighah
    PILLARS


 OPINION OF
  SCHOLARS


APPLICATION




    7
                          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
              payment
APPLICATION



                                                  Asset




    8
                    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
                          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 and
APPLICATION          Shariah Advisory Council of Bank Negara Malaysia




    10
                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
              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 and
APPLICATION
                sale contracts.
               Al-’Inah which is concluded on an asset which has
                changed in certain aspect.


    12
                                 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 BBA
APPLICATION
                   Sukuk Murabahah
                   Islamic Overdraft
                   Murabahah Trade Financing



    13
              END OF CHAPTER

 DEFINITION



  EVIDENCES



    PILLARS


 OPINION OF
  SCHOLARS         
APPLICATION




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