Others say the wording in the legal documents and customer forms can solve the problem. The intention is not Bay inah report transfer these Assets to the customer, and should Bay inah report customer insists on the transfer of these Assets to them, there are ready Bay inah report clauses that will force the customer to sell these Assets back to the Bank and cancel the whole transaction.
No point going through a Bank; the financing rates itself would not be worth it. This choice must be given to the buyer. The key is to sell an Asset which has no value or interest to the Buyer. BNM, based on discussions with Sharia scholars, has requested that this interconditionality be removed from Bai Inah documents and to a larger extent, the Malaysian version of the Bai Bithaman Ajil.
The purchase price must be clearly agreed upon, and so must the selling price, terms of which cannot be changed by any party without consent during the contractual tenure.
This effectively links the 1st and 2nd contract together; without one, the other is invalid. Therefore, it is in the best interest of the Buyer to on-sell the Asset to obtain the cash required, and make the instalment payments. Essentially, it is the opposite of what a Bai Bithaman Ajil is a derivation of Murabahah contractexcept that instead of the customer selling an asset to the Bank and the Bank re-selling the asset to the customer at cost-plus-profit, it is the Bank who is selling the asset to the customer and re-purchasing it at a discount, thus creating a debt.
Unfortunately, the personal financing product has, over a short period of about 5 years, grown into this large monster which is profitable that many banks are finding it difficult to ignore.
Provide clear documentation on the whole transaction as safeguard to the contract. But for me, interconditionality is dependent on the Asset used for the transaction. Click to read more about recent development on Bai Inah and issues on Interconditionality in the Contract of Bai Inah.
Naturally, the original Seller would make the offer to re-purchase the Asset to immediate settlement for the Buyer to obtain cash. The Banks sees the conventional counterpart has having the ability to provide easy and hassle-free products and the Islamic Banking industry is under pressure to produce a similar competitive product.
The key consideration to remove interconditionality is to make the arrangement into 2 separate AND totally independent contracts. The purpose of both structure is to create debt, and under both structure, cash can be obtained, therefore Bai-Inah can also be used to procure Assets.
Until then, Bai-Inah still provides a quick solution to building the books of Malaysian Banks. There is no intention of Asset sale or any movement of ownership as the Asset, i. The clause is created to create a legal obligation for the customer to re-sell back the Asset only to the Bank.
Use of Bai Inah in Malaysia Practitioners in Malaysia, however, have selectively adopted the Bai-Inah contract for the use of personal financing and other working capital requirements mainly because of the following: Let the Buyer keep the commodity; the debt has already been created.
It is not invalid, this much is clear, so long as certain rules are adhered to. This margin is seen as too close for comfort to the concept of interest on top of a loan. Sequentially this must happen to ensure that the Sharia requirements are met.
Furthermore, criticism has also come in the way of how Bai-Inah is structured.
Instead of a more concerted effort to develop a product which is contractually more acceptable to the global Islamic audience, more and more Malaysian banks are turning to personal financing to capture the growing demand for the product as consumers try to minimise credit card debts by restructuring to a term-like product.
However, there is huge confusion in the industry. Interconditionality means that if a certain event happens, a clause or an effect is activated to rectify the event.
What is Bai Inah? The alternative where a lot of practitioners are moving is Commodity Murabaha Tawarruq.Below is a summary of Hudson's Bay Company's latest financial information.
Quarterly Results Format Size ; Financial Results: N/A: Annual Disclosures.
Interconditionality in Bai-Inah 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. 22 October Teotihuacan mural paintings “Reticulated Jaguar” and “Procession of Characters”, dated from to AD, were intervened by the National Institute of Anthropology and History (INAH) experts, with the objective of removing artificial support installed 50 years ago, which added weight.
Bai al Inah.
English: sale and buy-back. Definition: The sale and buy-back of an asset for a higher price than that for which the seller originally sold it.
A seller immediately buys back the asset he has sold on a deferred payment basis at a price higher than the original price. Special Report Resolutions on Bai ‘Inah in Malaysia: An.
Bai’ Al-Inah is a part of Islamic finance, such as a Muslim mortgage. The financial institution, or the financier, will purchase an asset will be disbursed by the term that the financial institution lays out.
bay al-inah Inah means salaf, i.e., contracting a loan (purchasing on credit). According to some jurists, inah is defined as a sale of a commodity on credit and repurchasing it for a lesser amount in cash.Download