Islamic Money Market Shariah Perspective Ustaz Mohd Bakir
Islamic Money Market : Shariah Perspective Ustaz Mohd Bakir Haji Mansor Research Fellow, Centre for Fiqh Muamalat Islamic Banking and Finance Institute Malaysia (IBFIM)
Contracts Applied Contracts applied in the activities of the Islamic Money Market are: Ø the profit sharing contract of Mudharabah, and Ø the trading contracts of: • • Murabahah Bai Bithaman Ajil Bai al-Dayn, and Bai Inah Islamic Banking and Finance Institute Malaysia (IBFIM) 2
Mudharabah Contracts Mudharabah contracts are applied in: - deposit taking creating : • GIIs and • NIDs-i, and - inter bank investments Islamic Banking and Finance Institute Malaysia (IBFIM) 3
Requirements Mudharabah deposits must meet the following requirements (conditions): - they must be in cash (customers must process the cash) - they must be in specific amounts - they must be paid to the entrepreneurs (banks) - the profit sharing ratio must be known at the points of contracts Islamic Banking and Finance Institute Malaysia (IBFIM) 4
Requirements, con’t Mudharabah deposits must not be used in prohibited activities, namely: - conventional banking which involves riba - conventional insurance which involves gharar (uncertainty) - gambling, and - trading haram materials, foods and beverages Islamic Banking and Finance Institute Malaysia (IBFIM) 5
Bai Bithaman Ajil (BBA) Trading contracts of Bai Bithaman Ajil are used to create: - debts for the issuance of ABs-i and - CPs-i Murabahah contracts are used to create: - MUNIFs Islamic Banking and Finance Institute Malaysia (IBFIM) 6
BBA and Murabahah Assets in BBA and Murabahah contracts must meet the following conditions: - they must exist in corporeal forms - they must be owned by the sellers - they must not be haram materials and assets used for haram purposes - they must be free from encumbrances - they must be specified Islamic Banking and Finance Institute Malaysia (IBFIM) 7
Negotiable Instruments-Islamic (NIs-i) are divided into: - those under contracts of Mudharabah: • GIIs and • NIDs-i, and - those under BBA, Murabahah and Bai al-Dayn: • ABs-i • MUNIFs and • CPs-i Islamic Banking and Finance Institute Malaysia (IBFIM) 8
NIs-i, con’t All the Islamic Negotiable Instruments are purchased at discounts. Upon maturity the NIs-i under Mudharabah will fetch their nominal values plus the declared dividends. Whereas the NIs-i under BBA, Murabahah and Bai al-Dayn will fetch their nominal values only (which are inclusive of notional profits). Thank you Wassalamu Alaikum Islamic Banking and Finance Institute Malaysia (IBFIM) 9
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