Shari'ah issues in the application of forward ijarah : the case of musharakah mutanaqisah partnership for home financing /
Islamic financial institutions currently provide a financing product for home under construction based on the musharakah mutanaqisah partnership (MMP) whereby forward ijarah is applied as a sub-contract. However, the theory of forward ijarah has not comprehensively studied yet. Besides, there are so...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English |
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Kuala Lumpur :
Kulliyyah of Islamic Revealed Knowledge and Human Sciences, International Islamic University Malaysia,
2014
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| Subjects: | |
| Online Access: | http://studentrepo.iium.edu.my/handle/123456789/6846 |
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| Summary: | Islamic financial institutions currently provide a financing product for home under construction based on the musharakah mutanaqisah partnership (MMP) whereby forward ijarah is applied as a sub-contract. However, the theory of forward ijarah has not comprehensively studied yet. Besides, there are some issues arising in its application in MMP for home under construction that need to be solved. This research aims at the study of forward ijarah including its legality, parameters and application. The study employed a comparative method when dealing with different opinions of scholars in choosing a preponderant view, whereas an analytical method was applied when identifying the Shari'ah issues that arise from its application. The study reveals that there is a consensus on legality of forward ijarah. The parameters of forward ijarah are constituted from rules of both ijarah and salam. Forward ijarah is allowed to be used along with other valid contracts in hybrid mode as long as it fulfills the criteria put forward by scholars. The study also shows that although usufruct is not a valuable asset in its originality according to Hanafi School, usufruct of ijarah is excluded from being a valueless asset on the basis of exception regardless of whether it is ijarah of a particular object or usufruct in liability. In addition, if the rental is fixed it comes out of being debt in liability, albeit it is not handed over. Therefore, immediate payment is not obligatory in forward ijarah. The issue that contradicts Shari'ah principle is that the bank does not bear any risk; rather, it considers the rental paid by customer for forward ijarah during the construction period as the compensation for the failure of istisna', and the customer also cannot charge the developer for abandoned house. The possible solution for the issue is that the bank should share in risk according to its portion in partnership as well as the customer can refer to the developer to charge the compensation for his actual failure in istisna'. This research suggests that government should put an article in the law of Islamic banking and finance that binds the developer to compensate the customer for his actual default. |
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| Physical Description: | xiii, 132 leaves : illustrations ; 30cm |
| Bibliography: | Includes bibliographical references (leaves 126-132) |