Salam (Forward sale) and Istisna' (Manufacture contract) in modern applications: a Maqasid al-shari'ah perspective

Ali, Mohammed Farid (2016) Salam (Forward sale) and Istisna' (Manufacture contract) in modern applications: a Maqasid al-shari'ah perspective. International Journal of Business, Economics and Law, 9 (5). pp. 65-73. ISSN 2289-1552

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Abstract

The modern application of Salam such as parallel Salam and combination of Salam with waÑd (promise) exposes Islamic financial institutions (IFIs) to risks—credit risk, market risk, and operational risk. Modern applications of IstiÎnaÑ by financing houses and projects in the form of parallel-IstiÎnaÑ and IstiÎnaÑ based BOT (buy, operate and transfer) has exposed the IFIs to hazards such as delayed and incomplete projects. This paper explores the extent to which modern applications of Salam and IstiÎnaÑ support the maqÉÎid al-SharÊÑah. The study suggests new terms and conditions to minimise the risks if not eliminate them. It advises IFIs to become IstiÎnaÑ contractors in the real economy rather than on paper only. Salam should not be a nearreplica of speculative and risky future contracts. If adjustments are not made in modern application of both contracts, the contracts risk jeopardising the very purpose of the SharÊÑah.

Item Type:	Article (Journal)
Additional Information:	7146/47801
Uncontrolled Keywords:	Salam, IstiÎnaÑ, maqÉÎid al-SharÊÑah, specific purpose, essential purpose, wasÉ’il (means), terms and conditions, option of viewing (khiyÉr al-ru’yah).
Subjects:	B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc > BP1 Islam > BP173.2 Sources of Islam
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Islamic Revealed Knowledge and Human Sciences Kulliyyah of Islamic Revealed Knowledge and Human Sciences > Department of General Studies
Depositing User:	DR MOHAMMED FARID ALI
Date Deposited:	24 Jun 2016 13:35
Last Modified:	12 Oct 2017 19:02
URI:	http://irep.iium.edu.my/id/eprint/47801

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