The Using of Bay’ Inah in the Islamic Financial Contract: The Theory, Regulation and Practice in the Islamic Financing in Malaysia
Abstract: Bay’ Inah is a sale and re-purchase contract between two similar people by differed payment. The contract is characteristically a loan in a form of sale. Obviously, the contract is at aim to get cash rather than to do selling. Hence, majority of Islamic jurist do not permit the contract as loaning is forbidden. However, the system is very popular in Malaysian Islamic financing schemes during around 1990s. The Malaysian Central Bank allows bay 'inah with a strict condition that is to be conducted in an organized manner to satisfy selling and buying. However, after getting numerous criticisms, the Central Bank have issued a new resolution by authorizing tawarruq means. The contracts involve more than two parties who are truly outsiders. However, the contract is still containing elements of formation (hilah) and loan. Therefore, the study was conducted to examine critically on the legality of the contract as well as its formation in avoiding usury. The study will look into alternatives in the Islamic financial financing system in order to comply the shariah principle completely. The study is a qualitative research by examining discourse of fiqh, as well as obtaining expert opinions from practitioners as well as academician.