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The Principles and Practices of Shariah in Islamic Finance - page 14 / 49





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Section 2: Purpose and Scope

  • 3.

    The purpose of this Shariah contract parameter for Murabahah is to provide reference on the nature and features of the contract to the Islamic financial services industry. This parameter is endorsed by the Shariah Advisory Council of Bank Negara Malaysia (SAC). Specific definition and guidelines on the basis of legitimacy in adopting the Murabahah contract are described to facilitate the understanding of the Shariah contract requirements. The features identified in this parameter shall serve to assist the Islamic financial services industry to identify, understand, apply and distinguish the contract from other contracts prevalent in the industry.

  • 4.

    The features identified and described in this parameter are extracted from the text of fatwas opined by Shariah boards or committees of financial authorities and institutions. For each of the fatwa on a particular conditionality, activity, situation or context relating to the contract, the underlying concept and principle is deduced and synthesized to guide the development of the Shariah parameter.

  • 5.

    The features outlined in this parameter may serve as general guidance for the application of Murabahah contract. Any practice by the Islamic Financial Institutions (IFI) which is not specified in the parameter can be conducted as long as it does not contradict the features outlined in the parameter.

  • 6.

    This parameter also takes into consideration relevant mechanisms and contracts such as Wa d, Wakalah, Kafalah and Rahn, where relevant. These are identified and proposed as secondary features mentioned in this parameter.

7. The scope of the parameter is confined to the Murabahah contract as endorsed by the SAC and adopted by the IFI under the purview of Bank Negara Malaysia (BNM).

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