Dual Agency Practices in Islamic Financial Institutions: A Fiqh Perspective
DOI:
https://doi.org/10.33102/jfatwa.vol21no1.297Keywords:
Islamic banking, Shariah issues, dual agencyAbstract
Bay al-tawarruq is increasingly adopted by Malaysian Islamic financial institutions (IFIs) in creating both deposit and financing products. The contract involves sequences of trading between three parties namely client, IFIs and brokers. However, in order to simply the operation and to minimize client’s involvement, the actual trading are conducted between IFI and brokers only. IFI will act on behalf of the client and execute all trading transactions. The practice triggers fiqh issue because the IFI (as agent of client) will sell and purchase commodity to himself. The present article discusses the issue by assessing Muslim jurists’ view pertaining to dual agency practices. The article adopts juristic analysis method in which classical and contemporary scholars arguments are analysed before a preferred opinion (tarjih) is concluded. Understanding the issue is vital to avoid misunderstanding about the legality of Islamic financial products particularly products that used the organized bay’ al-tawarruq as the underlying contract.
Downloads
References
Abdul Rahman Al-Juzairy, 2004. al-Fiqh ‘ala Madhahib al-‘Arba’ah, volume 3, Darul al-Hadith Cairo, p. 145-152.
Abdullah bin Sulayman Mannea, 2008. Review of Fatwas Issued during Al-Baraka Banking Group Symposiums, 2nd edition. Fatwa no. 1/15: The Shari’ah ruling on agents representing the two parties to a contract. Jeddah.
Abdullah Mahmud Al-Musili, 2006. al-Ikhtiar li Ta’lil al-Mukhtar, Dar al-Hadith, Cairo, volume 1, p. 493
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Shariah Standard for Islamic Financial Institutions, Shariah Standard no. 8 (Murabaha to the Purchase Orderer),2010m/1432h, p. 119 (3/1/3)
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), 2010. Shariah Standard for Islamic Financial Institutions, Shariah Standard no 23 (Agency), p.418 (6/1/4). Bahrain.
Al-Qaradaghi, n.d. Duar al-Wakalah fi al-Istithmar Badilan ‘an al-Mudharabah wa al-Musharakah wa al-Murabahah, Beirut.
Bank Negara Malaysia, 2013. Implementation of Shariah Advisory Council of Bank Negara Malaysia’s Resolution Tawarruq Based Deposit Products under a Dual-Agency Arrangement. Kuala Lumpur
Mansur bin Yunus al-Bahuti, 1993. Sharh Muntaha al-Iradat, Bab: Huquq al-‘Aqd, ‘Alam Al-Kutub, Beirut.
Muhammad bin Ahmad bin ‘Urfah al-Dusuqi, n.d. Hasyiah al-Dusuqi ‘ala al-Sharh al-Kabir, Dar Ihya’ al-Kutub Al-Arabiah, Cairo.
Mustafa Saad Abdah Al-Rahaibani, 1961. Matholib Uli an-Nuha fi Sharh Ghoyatul Muntaha, Maktabah al-Islami, Bab Wakalah, Encyclopaedia of Islamic Jurisprudence.
Wahbah Al-Zuhayli, 2007. Financial Transactions in Islamic Jurisprudence, Volume 1, Dar Al-Fikr, Second Edition, p. 665
Internet
Qaradaghi,http://www.qaradaghi.com/portal/index.php?option=com_content&view=article&id=535:2009-07-13-11-13-15&catid=84:2009-07-13-09-55-10&Itemid=13. Retrieved on 30 March 2015.
Islamic Finance Knowledge Repository (i-FKR), International Shariah Research Academy, http://ifikr.isra.my/fatwa/-/fatwa/getFatwa?_7008_WAR_fatwaportlet_fatwaId=368. Retrieved on 30 March 2015.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2020 Amir Shaharuddin, Aizul Aiman Musa, Fatin Syahirah Mohamad Nawi, Adi Hanif Mohamed Ahmad, Ahmad Mukarrami Ab Mumin
This work is licensed under a Creative Commons Attribution 4.0 International License.
The copyright of this article will be vested to author(s) and granted the journal right of first publication with the work simultaneously licensed under the Creative Commons Attribution 4.0 International (CC BY 4.0) license, unless otherwise stated.
