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

This article discusses four controversial sales in Islamic banking and finance, each having the potentials to be used as legal stratagems (Ąiyal) to cover up the ribawi transactions: bayĂ al-Ăąnah, tawarruq, bayĂ al-dayn, and bay al-wafĀā (or bayĂ alistighlĀl). 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 bayĂ al-Ăąnah and bayĂ aldayn, while the Gulf Cooperation Council (GCC) countries rely a great deal on tawarruq and bayʿ al-wafĀā (or bayĂ 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 ShariĂah 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 ShariĂah standard bodies at the international level also differ on them. Furthermore, the term “ShariĂah compliant” itself seems inadequate to reflect the true intention and objectives (maqĀĆid) of the ShariĂah in the transaction contracts of Islamic banking and finance employing those four contentious sales.