Contentious Sales in Islamic Banking and Finance: Analysis on their Proximity to Ribā

Ugi Suharto,


This article discusses four controversial sales in Islamic banking and finance, each having the potentials to be used as legal stratagems (ḥiyal) to cover up the ribawi transactions: bayʿ al-ʿīnah, tawarruq, bayʿ al-dayn, and bayʿ al-wafāʾ (or bayʿ al-istighlāl). Yet, Islamic bank and finance industries in the world rely on such types of sales in their transactions. Malaysian Islamic banks and capital markets depend heavily on bayʿ al-ʿīnah and bayʿ al-dayn, while the Gulf Cooperation Council (GCC) countries rely a great deal on tawarruq and bayʿ al-wafāʾ (or bayʿ al-istighlāl). Regarding tawarruq as a sale contract in Islamic banking and finance, Muslim economists have put forward its negative macro-economic implications. Similarly, some Shariʿah scholars who have endorsed some of the aforementioned sales are now re-questioning their validity. Not only have individual scholars had contrary opinions but institutional Shariʿah standard bodies at the international level also differ on them. Furthermore, the term “Shariʿah compliant” itself seems inadequate to reflect the true intention and objectives (maqāṣid) of the Shariʿah in the transaction contracts of Islamic banking and finance employing those four contentious sales.


Ribā; ḥiyal; Shariah compliance; Islamic capital market; Ṣukūk; Islamic jurisprudence; AAOIFI; securitisation; jurists; Gulf Cooperation Council (GCC); contentious sale

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