Islamic Banking

Question: Taruna has formed a partnership company with his wife Dara. A main activity of the firm is to purchase paddy from farmers direct from the paddy field. Farmers requested the payment in cash. The paddy is transported/supplied to a rice mill factory that convert the paddy into rice. The supply/sale of paddy to these millers is on cash basis as well as on credit (1-3 month period). This rice (milled paddy) shall be distributed by Taruna to the supermarkets and terms of payment shall be on cash and partly on credit. Short of cash, Taruna apply to the bank for the facility of revolving capital requirement. At the same time, Taruna also supply the rice and banana to Koperasi Krepek. This cooperative agreed on terms of payment via cash, and a 3-month credit terms. Taruna gets the supply of banana from Koperasi Pertanian Pisang. Koperasi Pertanian Pisang also gets the supply of rice from Taruna. Terms of trade between Taruna and this Koperasi Pertanian Pisang shall be partly on cash, credit and also trade-off between banana and rice. Dara is also doing a part-time business by selling gold ornament and jewelries to her clients through installment payments. She got the supply of these gold ornament and jewelries from Jauhari partly on cash, credit as well as on consignment basis. Jauhari is a gold smith and getting the supply from his suppliers on cash basis. As such, he requires bank facilities of revolving credit, Letter of Credit and overdraft facility. i. What is Shariah position, when Taruna sell paddy on (a) cash basis (b) on credit to the miller/factory? Justify your stand. (6) ii. What is Shariah position, when Taruna sell/supply rice to supermarket on (a) cash basis (b) credit (c) and when he received payment from Koperasi Pertanian Pisang by trade-off by with the banana? Justify your stand iii. What would be the suitable bank financing facility for Taruna for his working capital requirement? Explain your justification to your proposal. (6) iv. What is Shariah position, when Dara obtained gold ornament and jewelries on (a) cash, (b) credit and (c) on consignment basis? Justify your stand. (9) v. What is Shariah position when Dara sell the gold ornament and jewelries on (a) cash, (b) credit? Justify your stand. (6) vi. Under what contract and its modus operandi, would bank offer Jauhari, a gold smith, to grant him a revolving credit, Letter of Credit and overdraft facilities under Shariah compliant banking? Explain your answer. (10) vii. What is Shariah position when you swipe credit card when purchasing a gold ring to your loved one? Explain your answer. (4) Question: Taruna has formed a partnership company with his wife Dara. A main activity of the firm is to purchase paddy from farmers direct from the paddy field. Farmers requested the payment in cash. The paddy is transported/supplied to a rice mill factory that convert the paddy into rice. The supply/sale of paddy to these millers is on cash basis as well as on credit (1-3 month period). This rice (milled paddy) shall be distributed by Taruna to the supermarkets and terms of payment shall be on cash and partly on credit. Short of cash, Taruna apply to the bank for the facility of revolving capital requirement. At the same time, Taruna also supply the rice and banana to Koperasi Krepek. This cooperative agreed on terms of payment via cash, and a 3-month credit terms. Taruna gets the supply of banana from Koperasi Pertanian Pisang. Koperasi Pertanian Pisang also gets the supply of rice from Taruna. Terms of trade between Taruna and this Koperasi Pertanian Pisang shall be partly on cash, credit and also trade-off between banana and rice. Dara is also doing a part-time business by selling gold ornament and jewelries to her clients through installment payments. She got the supply of these gold ornament and jewelries from Jauhari partly on cash, credit as well as on consignment basis. Jauhari is a gold smith and getting the supply from his suppliers on cash basis. As such, he requires bank facilities of revolving credit, Letter of Credit and overdraft facility. i. What is Shariah position, when Taruna sell paddy on (a) cash basis (b) on credit to the miller/factory? Justify your stand. (6) ii. What is Shariah position, when Taruna sell/supply rice to supermarket on (a) cash basis (b) credit (c) and when he received payment from Koperasi Pertanian Pisang by trade-off by with the banana? Justify your stand iii. What would be the suitable bank financing facility for Taruna for his working capital requirement? Explain your justification to your proposal. (6) iv. What is Shariah position, when Dara obtained gold ornament and jewelries on (a) cash, (b) credit and (c) on consignment basis? Justify your stand. (9) v. What is Shariah position when Dara sell the gold ornament and jewelries on (a) cash, (b) credit? Justify your stand. (6) vi. Under what contract and its modus operandi, would bank offer Jauhari, a gold smith, to grant him a revolving credit, Letter of Credit and overdraft facilities under Shariah compliant banking? Explain your answer. (10) vii. What is Shariah position when you swipe credit card when purchasing a gold ring to your loved one? Explain your answer. (4)