Revisiting The Rulings On Bai` `Inah

Revisiting The Rulings On Bai` `Inah

The Regional Shari’ah Scholars Dialogue, which was held on 28th and 29th June 2006, aims at harmonizing and promoting understanding amongst the Shariah scholars, who are involved in Islamic finance. The dialogue had specifically focused on finding the best solution to resolve the issue of the use of bai` `inah and tawarruq in the Islamic financial system. The Council and the participating Shari’ah scholars had taken a comprehensive approach with regard to bai` `inah and tawarruq transactions. Resolution The Council, in the Regional Shari’ah Scholars Dialogue on 29th June 2006 / 3rd Jamadil Akhir 1427, resolved that: 1. The permissibility of bai` `inah and tawarruq is still a matter of juristic disagreement among the Shari’ah scholars, backed by their own basis of justifications; 2. The basis relied upon to justify the permissibility of tawarruq is similar with the basis to justify the permissibility of bai` `inah. Therefore, both concepts shall be ruled similarly; 3. Bai` `inah is still necessary in the context of local Islamic finance development. However, the market players are required to strengthen and enhance the operational processes and documentation, to comply with the features of bai` `inah, as permitted; and 4. Since bai` `inah is still regarded as a matter of juristic disagreement among the Shari’ah scholars, it is more desirable that Islamic financial institutions limit its use in products which face difficulty in structuring them, based on other consensually accepted contracts. Issuer: Shariah Advisory Council, Central Bank of Malaysia.