This study reviewed the application of BBA in Malaysia. BBA or known as Al-Bai’ Bithaman Ajil is a financing facility that is based on a sale plus profit. It is commonly used by bank in Malaysia because it replaced the non-halal element in the conventional loan. However, there are some claims that the operation is not done correctly. Users especially the Muslims still doubt on its legality. Thus, bank officers were tested on how their bank operates it. The result exposed that the claim is not true. It is recommended that there should be future research on how the information should be exposed to the public. Keywords: Bai’ Bithamin Ajil, Islamic banking.
Bai’ bithaman ajil is a financing instrument that derived from an equation of sale plus profit. Most Islamic banks in Malaysia are using this concept for their customers on various commodities such as; houses, cars, land and personal financing. BBA is a substitute product for conventional loan which is believed to have impermissible element. The issue that really caught the attention of the writer for doing this research is people are still claiming that the principle of BBA is not correctly applied by the bank. It is said that this transaction involves interest (riba). As a solution, survey will be conducted and questionnaires will be distributed to the bank staff as well as its users. The purpose of the study would be to ascertain how islamically is the application of BBA and to examine ways on how to educate the users about the true concept of BBA. The research questions have been set up as follows; * Do the bankers exactly know about the principle of BBA? * How BBA is being applied in banking system?
Since this research is on the Islamic Financing product, some Islamic term has been introduced. BBA is normally defined as deferred payment sale. It is actually a solution to avoid interest (riba) as riba is not permissible in Islam. In a simple way, BBA is a loan in which its payment is free from riba. Literature Review
For this research study, the issue here has been brought up by the other researchers. The articles that are relevant to be reviewed would be about Islamic banking that focuses mainly on BBA.
BBA is an Islamic alternative to conventional loan. According to Eltegani Abdul Gader Ahmad (2006); accounting transactions need to be changed since they do not conform to Islamic principles and teachings. Due to that reason, BBA and other Islamic financing instruments have been introduced. Ameen Ali Talib defined BBA as, “Sale of goods by the bank to its client at a price that includes a profit margin mutually agreed upon” (2006, p.48). Mohammed Obaidullah (2007) further emphasizes, BBA is a sale on a cost-plus basis in which is introduced to avoid riba. As cited in the Arab Law Quarterly by Salleh described that riba is unlawful excess or deferment (Foster, 2007). It is commonly translated as interest. The prohibition is mentioned in Quran (2:275). Riba is strictly prohibited in Islam because it can be seen as exploitation towards the needy where the rich become richer and the poor become poorer (Foster, 2007). Since conventional loan has the element of riba, Muslims are prohibited to use it.
Eltegani Abdul Gader Ahmad (2006) and Mohd Nasir bin Mohd Yatim (2009) discuss that people start to have interest in Islamic financing products. It can be seen through the rapid existence of Islamic banking branches from various banks. The users are not only Muslims but it also consists of the non-Muslims. However, Ameen Ali Talib (2006) found that there are accusations that the banks do not implement the concept of BBA correctly until public claim that this transaction contains riba but under different names. Zairani Zainol (2008) stated that the accusation arise because the transaction...
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