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Revisiting the use of tawarruq as a means for liquidity: assessing fundamental concepts and prevalent applications

Sadique, Muhammad Abdurrahman (2019) Revisiting the use of tawarruq as a means for liquidity: assessing fundamental concepts and prevalent applications. Journal of Islamic Law Review, 15 (1). pp. 81-101. ISSN 0973-2918

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Despite of its recognition in its basic form by several contemporary bodies of Islamic scholars, different types of tawarruq (monetization) offered by various Islamic banks remain a heavily discussed issue among scholars in the field. The basic objection to such modes is that the explicit aim being the obtaining of cash against undertaking a future debt for a higher amount, it could insinuate a riba based relationship, the transaction only acting as an unessential formality. The guidelines provided purport to ensure that the structure remains a valid trading mechanism by ensuring the presence of the vital ingredients common to all sales and purchases, especially that the buyer becomes the lawful owner of an identified asset fully entitled and able to utilize it in any way he pleases. The adverse perception coordinated tawarruq could generate regarding the reality of Islamic banking should not be underestimated. Relevant controls should be adopted so that the application of legitimate modes of financing advocated by Shari‘ah such as partnership and investment are not pushed even further away from realization by the widespread adoption of coordinated tawarruq.

Item Type: Article (Journal)
Additional Information: 5640/76438
Uncontrolled Keywords: Tawarruq, monetization; Islamic, banking; Liquidity; Finance
Subjects: H Social Sciences > HG Finance > HG178 Liquidity
H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
K Law > KBP Islamic Law > KBP1 Islamic law.Shariah.Fiqh > KBP490 Furūʻ al-fiqh. Substantive law. Branches of law. > KBP639 Muʻāmalāt
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Ahmad Ibrahim Kulliyyah of Laws > Department of Islamic Law
Depositing User: Dr Muhammad Abdurrahman Sadique
Date Deposited: 19 Dec 2019 16:55
Last Modified: 19 Dec 2019 16:55
URI: http://irep.iium.edu.my/id/eprint/76438

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