Al Wadi’ah – Part III

Al-Wadi’ah Pillars:

1.       Contracting Parites:

a.       Muwaddi’ – Depositor

b.      Wadii’ – Custodian

2.       Wadi’ah – The deposited item or asset

a.       Must be valuable – able to be used for commerce.

b.      Must be physically able to possess.

3.       Sighoh – Ijab and Qabul (Contract - Offer & Acceptance)

Wadi’ah is not valid until there is mutual consent expressed through offer and acceptance (Ijab and Qabul). Offer is revocable unless declare irrevocable or until it is accepted or after a stated or reasonable time. Majority say it is not obligatory. Minority say obligatory only if the depositor cannot find anybody else to protect his property.

Al Wadi’ah – Part II

Syari’ah Justifications on Al-Wadi'ah

1. Based on the Holy Quran (An-Nisa’:58)

إِنَّ اللّهَ يَأْمُرُكُمْ أَن تُؤدُّواْ الأَمَانَاتِ إِلَى أَهْلِهَا وَإِذَا حَكَمْتُم بَيْنَ النَّاسِ أَن تَحْكُمُواْ بِالْعَدْلِ إِنَّ اللّهَ نِعِمَّا يَعِظُكُم بِهِ إِنَّ اللّهَ كَانَ سَمِيعًا بَصِيرًا

(An-Nisa’: 58)

“Indeed, Allah commands you to render trusts to whom they are due and when you judge between people to judge with justice. Excellent is that which Allah instructs you. Indeed, Allah is ever Hearing and Seeing.” (An-Nisa’: 58)

2. Based on the Holy Quran (2: 283)

“And if you are on a journey and cannot find a scribe, then a security deposit [should be] taken. And if one of you entrusts another, then let him who is entrusted discharge his trust [faithfully] and let him fear Allah , his Lord. And do not conceal testimony, for whoever conceals it - his heart is indeed sinful, and Allah is Knowing of what you do.”

3. Hadith by The Prophet S.A.W:

"Fulfill the trust that is entrusted to you, and do not betray of people who have entrusted you" . Abu Dawud and Tirmidzi

4. There are a collective agreements among the Fiqh Scholars allowing the practice of Wadi’ah since it is essential to the people in Muamalah.

Al Wadi’ah – Part I

Definition

Wadi’ah is derived from the word wada’a meaning lodge, leave or deposit. In Islamic Banking perspective, wadi’ah refers to safekeeping instrument that allows a person to keep the wealth or assets belonging to oneself with another person. In fact, it was practiced before Islam came. Under an Islamic scheme of savings, customers are assured for an interest free safekeeping services.

However, unlike the conventional banks, Islamic Banks or Financial Institutions not promising the customers any profit or interest for their deposits but they may offer the customers a profit earned by the bank through the investments made by utilizing using the customers money. It is called “Hibah” where it is absolute discretion of the bank.

Quote4today

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. - Henry Ford

Islamic Banking Logo In Malaysia

In Malaysia, if you noticed this logo at any banks, do not hesitate to ask for Islamic Banking options. In fact, most of the conventional banks have their own subsidiaries offering Islamic Banking Options.

Quote4today

"A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain." - Robert Frost

Sharia'h Concepts in Islamic Banking - Part I

Followings are among of the Sharia'h Concept In Islamic Banking:

1. Wadiah

2. Qardh

3. Hibah

4. Mudharabah

5. Bai' Bithamin Ajil

6. Murabahah

7. Musyarakah

8. Ijarah Thumma Al-bai'

9. Bai'ul Inah (Controversial)

And there are other concepts that have been developed and under development by the Ulama' and professionals to fulfill the needs of the Ummah and also the market.

We will be discussing each of the concept in the next entry.

Wallahua'lam.

Bai’ul Inah – Is it really Permissible? Part V

Issues Regarding The Practice of Bai’ul Inah

In Malaysia, the Islamic Banking System is believed to apply the first type of Bai’ul Inah (refer to Part IV that have been posted before).

Some of the banks are using the bank’s assets such as computer, photostate machine and even the ATM Machine that have no use to customers. The practice of the first type of Bai’ul Inah is obviuosly prohibited but the Malaysian are still practicing it.

Among of the issues that have been raised in Bai’ul Inah practices in Malaysia are:

1. Perform Bai’ul Inah and imposes conditions in the contract where the customers are required to re-sell the assets to bank at a lower price.

2. Applying the Syafi’e School opinion on the first type of Bai’ul Inah, however the Syafi’e Scool is only allowing the second type of Bai’ul Inah where there are no condition for the customer to re-sell the assets

3. No actual selling and buying transactions (bai’) and the assets are never leave the bank. The selling and buying are only an excuse to give out loan with interest.

Wallhua’lam

Bai’ul Inah – Is it really Permissible? Part IV

Definition of “Inah”?

Inah is derived from the word “ain” means goods or items since the buyer or the customer who is involved in this contract is in need to get the goods which is in this context, the “MONEY” or in more simple and descriptive words that usually used in the advertisments by banks or financial institutions “fast cash” or “express cash” only with a dash “i” ( -i ) to differentiate from the convetional financing options.

There are 2 (two) types of Bai’ul Inah:

1. The CUSTOMERS are REQUIRED to immediately sell the items or goods to the BUYER with CONDITION that the customer will sell it at a lower price from the first sale.
2. The CUSTOMERS are given to keep the items and after the buyer have the ownership, the cusomers have the OPTIONS to sell it back to the BUYER at a lower price from the first sale.

The Fiqh Scholars are collectively agreed on the prohibition of the first type of Bai’ul Inah since it has a condition that required the customers to immediately re-sell the goods to the buyer at a lower price in exchange for cash.

However, there are conflicts in opinion of the scholars regarding the second option of Bai’ul Inah since it may lead to the practice of riba’. The prophet S.A.W said that “Anyone who hover around the Hima-foyer (where prohibited) to fear of falling into it” – Al-Bukhari. Only a certain ulama’ from Syafi’e School are allowing the second type of Bai’ul Inah.

Bai’ul Inah – Is it really Permissible? Part III

Following is an illustration of a Bai’ul Inah transactions:

For example, Al-ABC Bank is a bank and Ahmad is a customer who is seeking for a financial assistance from a bank for his business. Ahmad came to Al-ABC Bank and applying for a loan through the Bai’ul Inah concept that offered by Al-ABC Bank.

Al-ABC Bank then will sell an asset to Ahmad (e.g: Bank’s Photostate Machine) on deferred payment basis at RM10,000. Thereafter, Al‐Amin Bank will immediately buy back the photostate machine from Ahmad for cash (spot payment) at RM6,000 (price that is lower than the initial selling price).

And in the end, Ahmad will received RM6,00 and indebted Al-ABC Bank for Rm10,000 with an extra amount of RM4,000.