Fakhrul Haziq Bin Mohd Setia

1713549

Bay' al-Inah: Concept and its application in Malaysia

The application of Bay' al-Inah as one of the Islamic banking product that has been introduced
alongside with other instruments under the province of Islamic finance. The purpose of this
instrument is principally in extinguishing the practice of riba’ and maximizing the concept of
transaction that permitted in Islam. Bay' al-Inah is a sale contract with immediate repurchase. The
term bay' al-Inah was used by the Hanbali and Maliki jurists. According to some Malikis, al-Inah was
derived from the root word of al-'aunu which means assistance. It is called bay' al-Inah because the
seller assists the buyer in obtaining his need in urgency manner. Although the jurists adopted different
approach in discussing the definition and concept of the contract, they had similar understanding on
its basic concept. According to them, the contract takes place when a person sells an asset in credit
and immediately buys back the asset in cash at different price.

This application of concept in transaction in the opinion of the jurist is differ each other in
terms of its applicability and the designation to fulfil under the Shariah. The Hanafis, Malikis and
Hanbalis were of the opinion that the contract was unlawful. On the other hand, the Shafi'is had two
rules in this matter. In one part, the contract deemed to be valid but on the other part to be viewed as
discouraged. The justifications that grounded by the opposing parties of this transaction is the
prohibition is indicated in the fatwa of Companions and hadith and secondly, the practice of the
contract was seen merely as a mechanism to legalise riba.

In Malaysian context, the considerable view that was adopted by the Banks under the
authority of Bank Negara is this concept of transaction is permissible and in line with the Shafie view.
Firstly, they argue that the contract was not clearly prohibited either in the Qur‟an or in the Sunnah.
They do not accept the validity of the hadith which indicate the prohibition of the contract. Secondly,
the Malaysian scholars argue on the basis of maslahah, in which refers to the need or interest of
Muslims contemporary society.

In conclusion, the ijtihad that produced by the Shafie’s thought and followed by the
Malaysian islamic scholars should be commendable and praised as it has provided the platform for the
utilization of financing which aligned with sharia and serves for the purpose of benefitting the public
interest.