Murabahah

DRAFT OF SHARIAH PARAMETERS: MURABAHAH PARAMETER

TABLE OF CONTENTS
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Overview: Challenge in Implementation of Shariah Rulings ....………………….... 1 Shariah Parameters Initiative………………………………………………………….. 2 Shariah Parameter Methodology……………………………………………………… 3 Notes to Users of Shariah Parameters……………………………………………….. 3 Applicability……………………………………………………………………………… 4

Appendix………………………………………………………………………….. ……….5

BANK NEGARA MALAYSIA

CONCEPT PAPER OF SHARIAH PARAMETER

1. Overview: Challenge in Implementation of Shariah Rulings 1.1 In response to the need for a conducive, sound and stable Islamic financial environment, local and global Shariah governing bodies have formulated Shariah rulings and expressed Shariah opinions in the form of fatwas, resolutions and policies to be adopted by the Islamic financial industry.

1.2 An equivocal approach in formulating Shariah rulings for a particular product or financial service that has a wide implication across industry and across sovereignty calls for a more systematic Shariah ruling formulation. This is important if consistent Shariah opinions are to be adopted within or across sovereignty that allows comparison of Shariah rulings.

1.3 In implementing Shariah rulings, it is observed that the Islamic financial industry is faced with a number of challenges as follows:-

a. lack of familiarity and ability to understand Islamic finance concepts; b. lack of published references on how to operationalise Shariah approved contracts from Shariah authorities; and c. lack of publicly available document on fatwa and Shariah resolutions as a source of reference.

1.4 It is also observed that implementation of Shariah rulings is limited to product approval and not comprehensive across product development and product life cycle comprising product idea generation, monitoring and supervision.

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BANK NEGARA MALAYSIA

CONCEPT PAPER OF SHARIAH PARAMETER

2. Shariah Parameters Initiative

2.1

Bank Negara