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26 Arab L.Q. 499 (2012)
The Bay' al-'Inah Controversy in Malaysian Islamic Banking

handle is hein.journals/arablq26 and id is 513 raw text is: Arab Law ... Quarterly BRILL Arab Law Quarterly 26 (2012) 499-511 brill.nil/alq The Bay' al-Inah Controversy in Malaysian Islamic Banking' Amir Shaharuddin* Senior Lecturer, Faculty ofEconomics and Mualamat, Islamic Science University ofMalaysia, Bandar Baru Nilai, N. Sembilan, Malaysia Abstract The current practice of Islamic banking in Malaysia has been criticised as insufficiently dif- ferent from conventional banking. One of the foci of this criticism is the application of bay' al-'inah, sales contract with immediate repurchase, in creating a number of so-called Islamic financing products. The present article examines the classical jurists' assessment of the con- tract and then evaluates the justifications of the Malaysian National Shari'ah Advisory Committee (NSAC). As a case study, this article analyses the application of bay' al-'inah in inventing a credit card of Bank Islam Malaysia Berhad. Understanding the NSAC's justifi- cations will help us comprehend their methodology and approach when approving other Islamic banking products in the country. Keywords bay' al-'inah; Islamic banking; credit card 1. Introduction Islamic banking institutions operate in a very competitive and demanding industry. In order to survive, they must be able to meet their customers' sophisticated financial needs. Product innovation is seen as the key success to maintain current business growth. Interestingly, the development of new products occurs more extensively in the banking institutions of South- East Asia when compared to innovation within the Middle East. Malaysia is one of the countries where new products are regularly developed. The * E-mail: amir@usim.edu.my. An earlier version of this article was presented at the Conference on 'Re-imagining the Shari'ah: Theory, Practice and Muslim Pluralism at Play' held in Venice, 13-16 September 2009. @ Koninlijke Brill NV, Leiden, 2012 DOI: 10. 1163/15730255-12341245

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