Issues Scholars’ Opinion Resolution

The Use of Interest Rate as Concept Paper Murabahah

Benchmark -S9(8)- Any terms and conditions that are prohibited by
-Banks use BLR/BR as profit rate for -There is the difference between Shariah or do not reflect the nature of Murabahah
financing targeting the benchmark and transaction shall be avoided. Clauses that waive IFI’s
demanding the benchmark liability on the underlying asset prior to the execution of sale
-Arguments transaction must not be in Murabahah documentation.
Profit rate = interest rate -Murabahah itself is not resemble to -S10(2)- On the requirement to disclosure the mark up or
the conventional contract or financing profit margin to customer, IFI must disclose the profit in
absolute value and where appropriate, the applicable profit
rate
-S10(3)- IFI may provide illustration on the computation of
profit margin based on the adopted pricing methodology to
the customer

Shariah Parameter Reference 1

-S20- The markup, in the form of an absolute amount or a
certain percentage of acquisition cost shall be determined
and specified before the conclusion of the Murabahah
contract. Any benchmark adopted to determine the markup
shall be specified.
Issues Scholars’ Opinion Resolution

Promise to Purchase (Wa’ad) Concept Paper Murabahah

-Financier cannot enter into an -Ask customer to sign a Wa’ad -S9(4)- IFI shall ensure the documentation on promise to
actual sale contract when (promise contract) to purchase the purchase the asset provides adequate right for IFI to claim
commodity is not yet in possession commodity after the possession by compensation for losses suffered due to the breach of
bank promise by the promisor
-Customer refuse to buy it after -S9(10)-The legal documentation on promise to purchase
possession -Promise must be documented as it and appointment of agent must be independent of and
can be brought to court if there is any separate from the asset purchase and asset sale agreement
default later after the possession S10(1)(g)- Compensation following customer’s failure to
fulfill the promise to purchase the asset

Shariah Parameter Reference 1

-S72- The Wa’ad by the purchase orderer to purchase the
asset from the IFI upon the latter’s acquisition of the asset
shall be binding on the purchase order
-S74- During the purchase requisition, the purchase order
application shall contain the promise which must be duly
signed by the purchase orderer.
Issues
Securitization on Murabahah
-Seller may ask security from the -it is needed to compensate for any Concept Paper Murabahah
purchaser to secure if any default
-having security deposit (Hamish
Jiddiyah) is permissible or not
Scholars’ Opinion Resolution
default in the future made by the -S9(7)(e)-The asset sale agreement shall or must stipulate:
purchaser Terms on compensation associated with default events
Shariah Parameter Reference 1
-S99- The IFI may require assurances in two stages of MPO
arrangement. The first is assurance at the stage of Wa’ad
from the purchase orderer and the second is assurance at
the stage of Murabahah contract. The assurance at the
Wa’ad stage is to ensure actual purchase of the asset by the
purchase orderer from the IFI while the assurance at the
Murabahah contract stage is to ensure full payment of the
selling price at the date of maturity. These assurances may
include a security deposit, a third-party guarantee, a pledge
of any asset or real or moveable property, or a pledge of the
asset of the Murabahah contract, cheques or promissory
notes or any security measure deemed legal and lawful’.
Issues Scholar’s Opinion Resolution

Guaranteeing the Murabahah Shariah Parameter Reference 1

-Guarantor (3rd party) cannot charge -Intermediary is needed to secure the S99- The IFI may require assurances in two stages of MPO
fees on the loan as it will amounted payment and charging a service fee is arrangement. The first is assurance at the stage of Wa’ad
to riba’ not accountable to riba as there is the from the purchase orderer and the second is assurance at
need to it the stage of Murabahah contract. The assurance at the
Wa’ad stage is to ensure actual purchase of the asset by the
-If there is still no definite ruling on it purchase orderer from the IFI while the assurance at the
then no guarantee should be charge Murabahah contract stage is to ensure full payment of the
but they can charge for a fee to cover selling price at the date of maturity. These assurances may
the expenses incurred in the process include a security deposit, a third-party guarantee, a pledge
of issuing a guarantee of any asset or real or moveable property, or a pledge of the
asset of the Murabahah contract, cheques or promissory
notes or any security measure deemed legal and lawful

S101-a third party guarantor shall be of good financial

standing and is capable of making good the installment
defaulted by the purchase orderer