Al bay’ bithaman ajil
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BBA is a contract where goods are delivered immediately but payment is deferred to a future date. It involves the prompt delivery of goods to the buyer while postponing payment until a later specified date or through installments. Hadith provide evidence that deferred payment contracts were permitted by the Prophet Muhammad, including instances where he engaged in such contracts and where the payment terms included profit for the seller in addition to the price. For BBA contracts, there must be an offer (sighah), an asset or goods, and an agreed upon price between the buyer and seller. BBA is commonly used in Malaysia for medium to long-term financing of goods like property, vehicles, education costs, and other assets.
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In our world nowadays, the contract of Al-Bay’ Bithaman Ajil (BBA) had always been used for long time duration of financing. For example, home financing. In Malaysia also, this concept is popular and it showed that at the Kuala Lumpur High Court alone, 90% of the 3,200 Muamalat cases registered between 2003 to 2009 concerns BBA . While the BBA is popular, it has proven to be quite unsatisfactory to the customers and bankers. That’s why Musharakah Mutanaqisah concept is being argued as a better contract than BBA for long time duration.
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- Evidence for BBA comes from hadiths describing Prophet Muhammad engaging in deferred payment sales.
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Brief Introduction to Diminishing Musharkah Venture AdvisorsDiminishing Musharah is best instrument in my opinion for Housing Finance. With its structure and flexibility it can play very important role in growing the Islamic Finance.
There are three possible structures of musharakah partnership in a business venture, namely, permanent musharakah, temporary (redeemable) musharakah and diminishing musharakah. The term Musharakah means joint venture where profits are shared amongst the partners as agreed between them and losses have to be borne by each partner according to their investment.
In DM, a financer and a client participate in either ownership of a joint property, or in a joint commercial business, with the understanding that the client partner will buy the equity share of the financier partner over an agreed period of time until the title to the equity is completely transferred to the client by payments of installments to the financier for purchase over the agreed period. The buying and selling of equity is not stipulated in the partnership contract as it is not allowed - one partner is allowed to give only a promise to buy.
Murabaha final presentation 
Murabaha final presentation Wajeeha PervezThis document provides an overview of Murabaha, an Islamic financing structure. It defines Murabaha as a sale where the seller discloses the cost of an item and sells it for a higher price, adding a known profit. The document outlines the difference between Murabaha and Musawamah sales, basic rules of Islamic sales, evidence for Murabaha's validity, how it is structured as a financing transaction, potential issues, and mistakes to avoid. It concludes that Murabaha must be implemented carefully according to Islamic principles, as a legitimate sale rather than an interest-based loan.
Bba2
Bba2Faizal AhamadThe document discusses the issue of Bai Bithaman Ajil (BBA) contracts as used in Islamic financing in Malaysia. It summarizes the conceptual model of BBA, which involves the deferred payment sale of an asset from a seller to a purchaser. The document then discusses 5 previous court cases related to BBA and the legal issues they raised. The cases analyzed whether the BBA structure qualified as a legitimate sale contract under Shariah or resembled interest-based financing. The document concludes by noting the Malaysian government strengthened regulations on Islamic finance to address legal uncertainties surrounding BBA raised by the court cases.
1 murabaha- by-najeeb_kkhan
1 murabaha- by-najeeb_kkhanAlhuda Centre of Islamic Banking & EconomicsThe document discusses the stages of a Murabaha financing contract in Islamic banking. It explains that Murabaha involves the bank purchasing an asset from a third party supplier on behalf of a customer and then reselling the asset to the customer at an agreed upon profit margin. The key stages are:
1) Promise stage where the customer requests financing and the bank approves. Relevant agreements are signed.
2) Agency stage where the customer is appointed as the bank's agent to identify and acquire the asset from the supplier.
3) Acquiring possession stage where the bank takes ownership of the asset before reselling to the customer.
4) Execution stage where the customer makes an offer to purchase
1 murabaha- by-najeeb_kkhan
1 murabaha- by-najeeb_kkhanAlhuda Centre of Islamic Banking & EconomicsAlHuda Centre of Islamic Banking and Economics,
www.alhudacibe.com,Presentaion by Alhuda CIBE ON MODARABA
BBA
BBAKhadeeja ZulkifliThis document compares and contrasts Bai Bithaman Ajil (BBA) and Musyarakah Mutanaqisah (MMQ) financing structures.
BBA refers to the sale of goods on a deferred payment basis at a pre-agreed price that includes a profit margin. MMQ is a partnership where one partner promises to gradually purchase the other's equity share until full ownership is transferred.
Some advantages of MMQ are flexibility in payments, daily profit calculation incentives, and exemptions from installments. Key advantages of BBA are a set total cost, transparency, and lack of uncertainty.
The main differences are that MMQ is seen as joint ownership while BBA is debt financing
presentation of Islamic home finance ppt.pptx
presentation of Islamic home finance ppt.pptxCaamirCusmaanCaamirpresentation of Islamic home finance
Source of finance = financial institution
Source of finance = financial institutionFarah QonitaThe document discusses various sources of finance available from financial institutions for corporate entities. It covers equity-based financing options like trustee partnerships and debt-based options commonly used by conventional and Islamic banks. Some popular Islamic debt-based products discussed include bai muajjal murabahah, ijara, salam, istishna, istijrar, qard and tawarruq. Each financial instrument is explained along with its mechanics and differences from conventional alternatives.
9. financial Islamic securities-18.03.24.pptx
9. financial Islamic securities-18.03.24.pptxMrShohThe document discusses various Shariah contracts that are commonly used in Islamic banking and finance. It provides details on Mudarabah, Musharakah, Murabahah, Ijarah, Istisna, Tawarruq, and Wakalah contracts. For each contract, it outlines the key elements, parties involved, and how the contract is typically structured in generic transactions. Common applications of contracts like Musharakah Mutanaqisah, Ijarah Muntahiyah Bittamlik, and Istisna followed by Ijarah are also summarized.
Haseeb portion
Haseeb portionshams1234The document discusses accounting standards for Islamic finance established by AAOIFI in 1991. It provides an overview of Murabaha, which is a sale with a known cost and profit, and Ijarah, which is an Islamic alternative to leasing where the owner transfers use of an asset to another for a specified period. The document also outlines the accounting processes and policies for Murabaha financing transactions and sale-and-leaseback transactions under Ijarah.
Topic iii. non participatory modes of islamic finance - murabahah(1)
Topic iii. non participatory modes of islamic finance - murabahah(1)SaudBilal1Murabahah is an Islamic financing contract where the bank purchases an asset for a customer and sells it to them at an agreed upon profit. It involves four main steps: 1) the customer requests financing from the bank for an asset; 2) the bank purchases the asset and takes ownership; 3) the bank sells the asset to the customer at a higher price to cover costs and earn a profit; 4) the customer pays for the asset in installments over time. While murabahah is technically a sale contract, it is primarily used by Islamic banks as a financing instrument to provide financing without charging interest.
Lecture 2a_ Murabaha and its application.pptx
Lecture 2a_ Murabaha and its application.pptxMuhammadAmanAzamMurabahah refers to the sale and purchase of an asset where the acquisition cost and profit margin are disclosed to the purchaser. It is commonly used for short-term financing in Islamic banks. In a typical murabahah transaction, the bank buys an asset requested by the customer and then sells it to the customer at a higher price, allowing payment to be deferred. Key conditions include the asset being in existence and owned by the seller prior to resale. Murabahah provides an alternative to interest-based financing that is permissible under Islamic law.
Gharar in the contract final
Gharar in the contract finalusmaniftikhar93The document discusses various types of contracts that contain gharar (uncertainty) which are prohibited in Islamic law. These include twin sales where the sale of one item is contingent on the sale of another; twin contracts where two different contracts are combined; bai urboon where the buyer has the option to forfeit a deposit or complete the purchase; and forward contracts where delivery is at a future date creating uncertainty. Classic contracts of gharar from early times involved random selection that turned trade into gambling. Contingent contracts where the sale depends on an uncertain future event also contain impermissible gharar.
Diminishing musharakah presentation_02-06-08
Diminishing musharakah presentation_02-06-08Alhuda Centre of Islamic Banking & EconomicsAlHuda Centre of Islamic Banking and Economics,
www.alhudacibe.com,Presentaion by Alhuda CIBE ON MODARABA
Project Marketers
Project MarketersDownPaymentOptionsDown Payment Bonds can be a valuable and useful tools for project marketers interested in selling units faster to more qualified buyers. In this presentation we present the simple ways that a Down Payment Bond can help these real estate professionals achieve their objective faster.
Islamic finance-promise
Islamic finance-promiseTariqullah KhanAll the Islamic financial contracts that are dominantly in practice are actually based on promise not sale contracts and by its nature a promise is non-binding but due to prudential requirements it is treated as binding.
Salam
SalamAamir AyazThe document discusses Salam, an Islamic financing contract where payment is made upfront for goods to be delivered later. It defines Salam, provides perspectives from Islamic law schools, and outlines conditions like precisely specifying the commodity, quality, quantity and delivery timeframe. Salam can finance farmers, traders and industrialists by providing upfront capital. Risks are transferred between buyer and seller, and parallel Salam contracts allow immediate resale of goods.
The Different Modes of Islamic Finance
The Different Modes of Islamic FinanceCamille Silla PaldiThe document summarizes several key Islamic financing modes:
1) Murabahah is a cost-plus sale where the bank discloses costs and sells an asset to a customer on a deferred payment plan at a markup. Salam and istisna'a are used for agriculture and project financing respectively, allowing for advanced payment in exchange for future delivery of goods or projects.
2) Ijarah is an Islamic lease where the bank owns an asset and leases it to a customer for rental payments over a set period, after which the asset is either returned or sold to the lessee.
3) Each contract has specific steps and conditions to ensure compliance with Sharia principles like prohibition of interest and uncertainty
3rd Global Islamic Microfinance Forum' 2013
3rd Global Islamic Microfinance Forum' 2013Alhuda Centre of Islamic Banking & EconomicsThis document outlines key aspects of Murabahah financing provided by microfinance institutions (MFIs). It defines Murabahah as a sale with disclosed costs and profit. For MFIs, it involves the institution purchasing an asset for a customer and reselling it to earn a profit. The process involves several steps: signing agreements, the customer acting as an agent to purchase goods, the MFI disbursing funds and taking possession, and the customer making a deferred payment offer that is accepted. Some issues that can arise include lack of evidence for purchases, delays in customer declarations, and pricing matters. Addressing these helps ensure Shariah compliance in MFI Murabahah transactions.
Brief Introduction to Diminishing Musharkah
Brief Introduction to Diminishing Musharkah Venture Advisors
presentation of Islamic home finance ppt.pptx
presentation of Islamic home finance ppt.pptxCaamirCusmaanCaamir
Topic iii. non participatory modes of islamic finance - murabahah(1)
Topic iii. non participatory modes of islamic finance - murabahah(1)SaudBilal1
Lecture 2a_ Murabaha and its application.pptx
Lecture 2a_ Murabaha and its application.pptxMuhammadAmanAzam
Diminishing musharakah presentation_02-06-08
Diminishing musharakah presentation_02-06-08Alhuda Centre of Islamic Banking & Economics
3rd Global Islamic Microfinance Forum' 2013
3rd Global Islamic Microfinance Forum' 2013Alhuda Centre of Islamic Banking & Economics
Al bay’ bithaman ajil
- 2. DEFINITION Literally : Deferred payment sale. Technically: Sale contract in which the payment of the price is deferred and payable at a certain particular time in the future. A contract whereby the commodity is delivered immediately and the price is paid by installment. The selling price includes a profit margin agreed by both parties and the profit is not an interest payment, however it is part of the sell price.
- 3. NATURE OF BBA BBA is essentially to sell something with a prompt delivery of sold items to the purchaser while the payment is postponed until a specified date in the future or through installment (taqsit). Can be implicated for other sale contracts including bay’ Musawamah and bay’ al-Murabahah. (not applicable for salam contract). In the Malaysian context the selling price both in bay’ al-Murabahah and BBA is based on the cost price. However Murabahah is used for short-term transactions while BBA is used for longer-term transactions.
- 4. EVIDENCE In general, no issue arises from the practice of deferring the payment of sale price. In a Hadith by a companion, Jabir : that the Prophet (s.a.w) bought a camel from him outside the city of Madinah whereby the payment was settled later on in Madinah. In another Hadith narrated by Aisha r.a : that the Prophet (s.a.w) bought a meal from one Yahudi with deferred payment, and he mortgaged his iron shirt made from iron.
- 5. PILLARS OF BBA Seller Buyer Sighah Asset/ Goods Price
- 8. TIME VALUE OF MONEY IN BBA Hadith did not specifically mention whether such increment is allowed on the basis of its deferment. According to majority jurists: increasing the price due to the deferment in the payment is permissible because the increase is against the commodity and not against the money. It’s permissibility is based on legal proof nass and by the testimony of the jurists by consensus.
- 9. APPLICATION In Malaysia, BBA financing is employed by bank to provide medium to long-term financing to clients for acquiring e.g. Property, land, motor vehicles, consumer goods, shares, overdraft facility, education financing package etc. Home financing is the most popular facility granted under the concept Bai Bithaman Ajil (BBA) either to purchase existing completed houses, build or construct new house on customer’s land even as a refinancing facilitiy. In BBA, the customer sells the property purchased to the bank for a cash sum paid to the customer and the property will then be immediately resold back by the bank to the customer at higher price which include the bank’s profit on the sale, payable by the customer to the bank by monthly installments over a fixed period of time.
- 10. CLIENTS INTEND TO ACQUIRE THE FOLLOWING ITEM: Houses / Shop houses Land Motor vehicle Consumer goods Shares Overdraft facility Education financing package Personal financing Other suitable and acceptable goods