Abstract: Though quite fast on growth, Islamic financing at large, and its diverse instruments, is a controversial matter among scholars. This is evident from the ongoing debates on its Shariah compliance. Arguments, however, are inciting doubts and concerns among clients about its credibility, which is harming this lucrative sector. The work here investigates, particularly, some issues related to the Tawarruq instrument. The work examines the issues of linking Murabaha and Wakala contracts, the reselling of commodities to same traders, and the transfer of ownerships. The work affirms that a multi-agent smart electronic market design would facilitate Shariah compliance. The smart market exploits the rational decision-making capabilities of autonomous proxy agents that enable the clients, traders, brokers, and the bank buy and sell commodities, and manage transactions and cash flow. The smart electronic market design delivers desirable qualities that terminate the need for Wakala contracts and the reselling of commodities to the same traders. It also resolves the ownership transfer issues by allowing stakeholders to trade independently. The bank administers the smart electronic market and assures reliability of trades, transactions and cash flow. A multi-agent simulation is presented to validate the concept and processes. We anticipate that the multi-agent smart electronic market design would deliver Shariah compliance of personal financing to the aspiration of scholars, banks, traders and potential clients.
Abstract: Profit and loss sharing suggests an equitable sharing of risks and profits between the parts involved in a financial transaction. Salam is a contract in which advance payment is made for goods to be delivered at a future date. The purpose of this work is to price a new contract for profit and loss sharing based on Salam contract, using Khiyar Al Ghabn which is an agreement of choice in case of misrepresent facts.
Abstract: One of prevailing modes of finance in emerging
Islamic banking system is Murabah’a. It means a financial dealing or
transaction in which seller tells cost of the goods to be sold to buyer.
Otherwise, the transaction would become invalid. In this mainstream,
import Murabah’a transaction is divergent in such a way that the cost
is not recognized and identified due to execution of import
transaction in foreign currency i.e. US Dollar and the next transaction
of Murabaha’a with the client is executed in local currency. Since this
transaction is executed in dual currency i.e. bank pays supplier in
foreign currency and executes Murabah’a with its client in local
currency and it is not allowed in according to Islamic Injunctions as
mentioned in hadith narrated by Hazrat Ibn-e-Umar (May Allah be
pleased with them) used to sell his camels with Dirhams and take
dinars instead and vice versa. Upon revealing before the Prophet
(Peace be upon him), he was advised that it must not be contingent in
the agreement and the ready rate would be applied and possession of
one of the consideration is compulsory. The solution in this regard is
that the import Murabah’a transaction should be in single currency
However, other currency can be paid in payment at the time of
payment in a very indispensable situation provided that ready rate
would be applied. Moreover, some of other solutions have also been
given in this regard.
Abstract: This paper illustrates the background of various
concepts, approaches, terminologies used to describe the basic
framework of an Islamic Hotel Room design. This paper reviews the
theoretical views in establishing a suitable and optimum environment
for Muslim as well as non-Muslim guests in hotel rooms while
according to shariah. It involves a few research methodologies that
requires the researcher to study on a few characteristics needed to
create more efficient rooms in terms of social interaction, economic
growth and other tolerable elements. This paper intends on revealing
the elements that are vital and may contribute for hotels in achieving
a more conclusive research on space planning for hotel rooms
focusing on the shariah and Muslim guests. Malaysia is an Islamic
country and has billion of tourists coming over for business and
recreational purposes. Therefore, having a righteous environment that
best suit this target user is important in terms of generating the
economy as well as providing a better understanding to the
community on the benefits of applying these qualities in a
conventional resort design.
Abstract: Al-Murabahah is an Islamic financing facility used in
asset financing, the profit rate of the contract is determined by
components which are also being used in the conventional banking.
Such are cost of fund, overhead cost, risk premium cost and bank-s
profit margin. At the same time, the profit rate determined by Islamic
banking system also refers to Inter-Bank Offered Rate (LIBOR) in
London as a benchmark. This practice has risen arguments among
Muslim scholars in term of its validity of the contract; whether the
contract maintains the Shariah compliance or not. This paper aims to
explore the view of Shariah towards the above components practiced
by Islamic Banking in determining the profit rate of al-murabahah
asset financing in Malaysia. This is a comparative research which
applied the views of Muslim scholars from all major mazahibs in
Islamic jurisprudence and examined the practices by Islamic banks in
Malaysia for the above components. The study found that the shariah
accepts all the components with conditions. The cost of fund is
accepted as a portion of al-mudarabah-s profit, the overhead cost is
accepted as a cost of product, risk premium cost consist of business
risk and mitigation risk are accepted through the concept of alta-awun
and bank-s profit margin is accepted as a right of bank after
venturing in risky investment.