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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. In: Kuala Lumpur International Islamic Studies and Civilisations (KLiISC) 2016, 7th-8th May 2016, Kuala Lumpur.

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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 near-replica 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: Conference or Workshop Item (Plenary Papers)
Additional Information: 7146/51925
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: K Law > KBP Islamic Law > KBP1 Islamic law.Shariah.Fiqh
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Islamic Revealed Knowledge and Human Sciences > Department of General Studies
Date Deposited: 08 Sep 2016 10:10
Last Modified: 12 Oct 2017 19:04
URI: http://irep.iium.edu.my/id/eprint/51925

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