Islamic Shariah Bank

The Islamic Shariah Bank providing a service of the collection of money, the channelization of money, selling, purchasing, insurance and so on. The selling and purchasing is basically done by the method of barter/transfer of property. The Bank decides its profit in the initial transaction, and includes the profit together with the real price. And the value of property in transaction will be adjusted according to the form of payment and the period of giving a payment, this system is also commonly known in Islamic Banking as murabahah, salam and istishna’.

In this article, I would like to draw my attention the point of Selling and Purchasing in Islamic way and Selling and Purchasing according to credit system.

Trading and purchasing in according to Islamic law (Shariah) and in according to Credit System.

وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا

“And Allah has permitted selling and purchasing and ban the riba” (Al-baqarah 2:275)

Islam allow the selling and purchasing publicly, and the Ulama (Islamic Scholars) also allows the selling and purchasing by credit system, among those ulamas who allow this type of selling and purchasing are Syaikhul Islam Ibnu Taimiyah, Imam Ibnul Qoyyim, Syaikh Abdul Aziz bin Baz, Syaikh Muhammad bin Sholih Al Utsaimin, Syaikh Al Jibrin and so on. But the Islamic Scholars agreed that the selling and purchasing are not at all free, there are certain rules must be followed during the transactions, here are some important points to notice during the transaction in according to Islamic law:

1. The payment can be paid later after the transaction

a. This is based on Qur’an
O you who believe! When you contract a debt for a fixed period, write it down (Al-Baqarah : 282)

b. Based on Hadith:
From Aisyah R.A said, Truelly that Prophet PBUH purchased a food from a Jew and he give a payment later, Prophet Give his iron clothe for the guarantee of payment. (Bukhari and Muslim)

2. Secondly, to add price after transaction is permitted due to an early of payment and due to a credit payment.

a. This is based on the Qur’an:
O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent. (An-Nisa’: 29)

Thus, it’s explained that all transaction as long as it is done by mutual consent is permitted.

b. Based on Hadith:
“During the prophet PBUH visit to Madina and the traders are selling the fruits with pay early trading for a period of one year or two years, the prophet PBUH said: “Whoever sale and purchase in paid early trading, should be in a equal dosage, and obvious weight and until the clear period of time”. (Bukhari and Muslim)

From the above proof of hadith, it is clear that prophet PBUH allowed the pay late trading with the clear passage of time, and with the clear weight and dosage, and it is also prevail for the credit system trading as well as cash payment trading.

3. The Proof of Consensus (Dalil Ijma’)
Muslim scholars agree that the trading by credit system with different price is permitted, among the scholars who agree with this argument are:

1. Syaikh Bin Baaz
When was questioned regarding on a legal to sell a sack of sugar and other things at 150 Riyals by credit. In which the value is equal to 100 riyals in cash sale. Then he remarks:
“The transaction of money in this way is allowed, furthermore the muslim is getting use of this transaction, and according to the consensus it is allowed to do a transaction among them in such a way, and it is not a riba.” (Ahkamul Fiqh, Syaikh Abduloh Al Jarulloh, Page: 57 – 58)

2. Syaikh Muhammad Shalih Al Utsaimin
He remarks on his book Al Mudayanah Page 4 “kinds of debt and trust”

Someone wanted to buy a commodity but he wasn’t have a money in cash to pay, he decided to buy a commodity and the money will be paid after period of time, with a condition that a price will be more higher then that if he pay it in cash. And this kind of transaction is allowed.
Presume: Someone buy a house for him self or for rent with a sum of 10.000 Riyals by a late fee till one year, in which if he could pay it in a cash it will cost only 9000 riyals, or if someone wanted to buy a car for him self or for rent with a sum of 10.000 riyals by a late fee till one year, in which if he could pay it in a cash it will cost only 9000 riyals.

Allah said in Qur’an:
“O you who believe! When you contract a debt for a fixed period, write it down.” (Al-Baqarah verse: 282)

Someone wanted to buy commodities but the fee would be paid in a fixed period, as he wants to sell those commodities.
Presume, someone buy a wheat and will pay the fee in a fixed period, but the price is higher then that if he buys it in cash, according to Syaikh it is allowed based on the qur’an above. And these kinds of transaction are also allowed by Syaikhul Islam Ibnu Taimiyah, based on the Qur’an and Sunnah and proof of consensus by scholars. (Majmu’ Fatawa 29/498-499)

4. The Proof of Measurement (Dalil Qiyas)
There is similarity between a credit fee and early payment fee, both of this transaction is allowed by Prophet Muhammad PBUH assuming that both of this transaction is late in receiving their fee or commodity. But, incase of early payment fee the money will be paid in advance but a commodity will be received later, similarly in case of credit fee the commodity is received in advance but the fee will be paid later. The different of both is in early payment fee the price will be less expensive then the credit fee.

5. The Proof of Benefits (Dalil Maslahat)
Transaction by credit system is benefit for both the seller and the buyer. The buyer will be benefited by gradually paying the money with a fixed period and the seller will be benefited by increasing the price, this kind of transaction does not contradict in Shariah (Islamic Law), because it is based for the benefits of ummah.

Syaikh Bin Baz agrees with this kind of transaction, in which both seller and buyer are having benefits, both of them like it and no one is loss. (Ahkamul Ba'i, Syaikh Jarulloh, page. 58).