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    Bay' Al-'Inah

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    Mahyuddin Khalid
    This document defines and discusses Bay' al-'Inah, a controversial Islamic financing structure. It begins by defining Bay' al-'Inah as a sale of an asset with deferred payment and later repurchasing the asset at a lower cash price. It provides evidence from hadith and scholars who permit and prohibit the structure. The pillars and conditions of Bay' al-'Inah are outlined, and the justifications of scholars on both sides of the debate are summarized. Finally, examples are given of how Bay' al-'Inah has been applied in Malaysian Islamic banking products.

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    Bay' Al-'Inah

    Uploaded by

    Mahyuddin Khalid
    2K views14 pages
    This document defines and discusses Bay' al-'Inah, a controversial Islamic financing structure. It begins by defining Bay' al-'Inah as a sale of an asset with deferred payment and later repurchasing the asset at a lower cash price. It provides evidence from hadith and scholars who permit and prohibit the structure. The pillars and conditions of Bay' al-'Inah are outlined, and the justifications of scholars on both sides of the debate are summarized. Finally, examples are given of how Bay' al-'Inah has been applied in Malaysian Islamic banking products.

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    Bay' al-'Inah

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    This document defines and discusses Bay' al-'Inah, a controversial Islamic financing structure. It begins by defining Bay' al-'Inah as a sale of an asset with deferred payment and later repurchasing the asset at a lower cash price. It provides evidence from hadith and scholars who permit and prohibit the structure. The pillars and conditions of Bay' al-'Inah are outlined, and the justifications of scholars on both sides of the debate are summarized. Finally, examples are given of how Bay' al-'Inah has been applied in Malaysian Islamic banking products.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2K views14 pages

    Bay' Al-'Inah

    Uploaded by

    Mahyuddin Khalid
    This document defines and discusses Bay' al-'Inah, a controversial Islamic financing structure. It begins by defining Bay' al-'Inah as a sale of an asset with deferred payment and later repurchasing the asset at a lower cash price. It provides evidence from hadith and scholars who permit and prohibit the structure. The pillars and conditions of Bay' al-'Inah are outlined, and the justifications of scholars on both sides of the debate are summarized. Finally, examples are given of how Bay' al-'Inah has been applied in Malaysian Islamic banking products.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    MAHYUDDIN KHALID

    [email protected]

    CONTENT
    DEFINITION

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    DEFINITION EVIDENCES PILLARS OF BAY AL-INAH CONDITIONS OF BAY AL-INAH OPINION OF SCHOLARS MODERN APPLICATION

    DEFINITION
    DEFINITION

    Literal:
    Loan or advanced payment

    EVIDENCES

    Technical:
    The selling of an asset with a mark up price on deferred payment, with the intention to sell the same asset to the debtor with lower cash price, which is meant to settle his debt.

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    DEFINITION
    Imam al-Shafii:
    DEFINITION EVIDENCES

    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 , higher or lower price than the first contract, or for an exchange of goods.

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    Ibn Qudamah:
    It is a sale of an asset with a deferred price, and buys back the same asset at a lower price.

    It is a bargaining (musawamah) sale and purchase 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.

    EVIDENCES
    DEFINITION

    Hadith:

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    Rasulullah (s.a.w) has ordered Amru ibn al As to prepare the army for the battle. He then purchased a camel in exchange for a delayed payment of 2 camels
    Narrated by al-Bukhari

    EVIDENCES
    DEFINITION

    Muslim scholars:
    Permissible based on analogy, the contract is similar to other sale and purchase contracts i.e. the transfer of ownership is taken place. The majority view that such a sale is forbidden. They are Hanafis, Malikis, Hanbalis and some Shafiis. Imam Shafii, Abu Yusuf, Abu Daud and Abu Thur are of the view that this contract of sale is not contrary to Shariah principles.

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    PILLARS OF BAY AL-INAH


    DEFINITION

    EVIDENCES

    Seller and buyer Merchandise/goods Price Sighah

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    FLOWS OF BAY AL-INAH


    DEFINITION
    3)Pay cash money

    EVIDENCES

    Price

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    A
    1) Sell Asset in deferred payment 2) Buy back Asset in cash

    Asset

    CONDITIONS OF BAY AL-INAH


    DEFINITION

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    Shariah Advisory Council of Bank Negara Malaysia resolved that bay al-'inah is still necessary in Malaysian context. However market player are required to strengthen and enhance their operational process and documentation to comply with the features of bay al-'inah permitted. Bay al-'inah is permissible subject to the following condition:
    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

    OPINION OF SCHOLARS
    DEFINITION

    Scholars are divided into two group:


    1. Those that prohibit
    Majority of the scholar including Hanafi, Maliki and Hanbali prohibit al-inah transaction The same result adopted by the Shariah council of AAOIFI and majority of Shariah Advisory Council in Malaysia and Brunei

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    2. Those that permit


    Includes Imam Shafie and supported by Ibn Hazm and Shariah Advisory Council of Bank Negara Malaysia

    10

    JUSTIFICATION OF THOSE THAT PROHIBIT


    DEFINITION

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    It is hilah to riba The underlying issue on bay al-'inah is the difference between the muqtada al-aqd and the actual motive of the contracting parties, whether to have a real contract of sale or as hilah for liquidity or monetary purposes. The polemic in the issue of permissibility of bay al'inah is the status of hilah. 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


    DEFINITION

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    Shafii approved bay al-'inah as financing mode A sale which is followed by a subsequent sale but without any intention to have al-'inah arrangement. Al-Inah that involves two contracts of sale in which the price of each contract (either cash or deferred) is similar to the other. Al-Inah which is concluded on an asset with a gap of time between the two contracts, the purchase and sale contracts. Al-Inah which is concluded on an asset which has changed in certain aspect.

    12

    APPLICATION
    DEFINITION

    Bay al-'inah has been used to construct numerous financing product offered by the bank in Malaysia:
    Personnel financing Working Capital Financing Istisna between 2 parties BBA financing products Islamic credit card Sukuk BBA Sukuk Murabahah Islamic Overdraft Murabahah Trade Financing

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    13

    END OF CHAPTER
    DEFINITION

    EVIDENCES

    PILLARS
    OPINION OF SCHOLARS APPLICATION

    14

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