Case Study

En. Malik, a research officer of SMM Islamic Bank, is examining some proposals from the Business Unit before presenting to the Shariah Board for approval. He needs to understand the underlying concepts, legal aspect and Shariah basis of the proposed structures, as follows;

Proposal 1: to strengthen the application of bay al- inah concept in selected asset financing products

Proposal 2: to change the underlying concept of vehicle financing product from Al-Ijarah Thumma Al-Bai to Murabahah

Proposal 3: to apply principle of Qard to Saving Account structure Proposal 4: To endorse other matters related to the Agreements

(a) late payment charges of 5% for defaulters.

(b) Early settlement fee of RM50

(c) The ibra clause

(d) Pre-contractual disclosure requirement

(e) Any complaint or dispute shall be channeled to the Financial Mediation Bureau

En. Malik is now preparing Shariah-related papers which shall consists of the following matters:

1) Discussion of the underlying concept

2) Legal aspect in reference to the relevant legislations and guidelines

3) Shariah basis and justification

4) Controversial and potential issues surrounding the concept of each proposal

5) Other relevant inputs to justify the proposals

Please advise En. Malik regarding the above matters in the light of relevant BNM Policy Documents, Islamic Financial Services Act 2013, Central Bank Act 2009 and other related regulations in Islamic banking and finance.