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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
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.
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

@ Koninlijke Brill NV, Leiden, 2012

DOI: 10. 1163/15730255-12341245

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