Seminar of Islamic finance and banking

BWFS3093
Ak Mohd Zulfiqree bin Japar
225339
Muhammad Jamal Ramzi bin Jakiran
227229
Syamsul Ariffin bin Tajuddin
227240
Banking product : Tawarruq
Money market product : Islamic Accepted
bills
Capital market product : Crude palm oil
future contract

Banking product (Tawarruq)

Definition of tawarruq
Buying a commodity with deferred payment and selling it
to a person other than the buyer for a lower price with
immediate payment.
Purchasing a commodity on credit and selling it to a
person other than the initial seller for a lower price on
cash

Flow of tawarruq

Condition of tawarruq

Ownership of the commodities.

Commodity is specified.
Possession of commodities.
Avoiding inah sales.
Details of the time of payments
Avoiding usury
Delivery is immediate

Application of tawarruq

Tawarruq or commodity murabahah as one of the

popularly used principles to structure various Islamic
financial instruments. Below list of some common Islamic
financial instruments that are structured based on
tawarruq:
Commodity murabahah deposit facility and placement
Personal financing
Asset financing
Cash line facility
BNM Islamic Accepted Bills (IAB)
Islamic Private Debt Securities (IPDS

Money Market product (Islamic

Accepted Bills AB-i)
Objective : Encourage and promote domestic and foreign
trade.
Types of AB-i :
Imports and Local Purchases
Exports and Local Sales

The AB-i is formulated based on the Shariah concepts of:

Al-Murabahah
Bai ad-Dayn

AB-i IMPORTS & LOCAL

PURCHASES
Financing under : Al-Murabahah
Customer allowed: A deferred
payment term up to 200 days.
Securitized by : Bill of Exchange
Bai al-Dayn : if bank decides to
sell IAB to the 3rd party.

AB-i EXPORT & LOCAL SALES

Traded under : Bai al-Dayn

Capital market product (crude palm oil future contract )

Definition of futures
An agreement between 2 parties o buy or sell underlying
instrument at a specific time in the future for a specific
price determine today.
Definition of crude palm oil future contract .
An agreement between 2 parties o buy or sell crude palm
oil at a specific time in the future for a specific price
determine today.

CPO Future contract specification

1.
2.
3.
4.

Instrument used: Crude palm oil

Contract size : 25 metric tons
Minimum price flunctuation : RM 1
Suitable contract can be use : Bay as-salam

Flow of Crude palm oil future contract

Advantages of future contract / why we need future contract

Risk
Competitors
Market price
wheather