An analytical study of the clauses of the Istisna’a and parallel Istisna’a standard according to AAOIFI

Eldersevi, El Fedil and Awang Hamat, Mohd Afandi and Md. Sawari, Mohd. Fuad (2026) An analytical study of the clauses of the Istisna’a and parallel Istisna’a standard according to AAOIFI. International Journal of Al-Turath In Islamic Wealth and Finance, 7 (1). pp. 1-32. E-ISSN 2716-6856

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Abstract

This research provides a foundational analysis of the clauses within the Sharia Standard for Istisna’a and Parallel Istisna’a issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The significance of this study lies in bridging the academic gap and regulating contemporary financial practices by reviewing the jurisprudential (Ijtihadi) standards that lacked sufficient prior Sharia studies by the organization. Employing both inductive and analytical methodologies, the study surveys scientific material from its original sources and examines relevant texts to derive the governing Sharia rulings. The findings primarily support the Sharia permissibility of Parallel Istisna’a due to the independence of its respective contracts and the absence of any suspicion of Riba (usury). Furthermore, the research presents a methodological critique regarding the limitation of the prohibiting ownership stake at one-third, proposing instead to increase it to one-half to ensure consistency with AAOIFI’s other standards. The study also recommends prohibiting the stipulation of "lifetime guarantees" due to the inherent uncertainty (Jahala) and risk (Gharar) involved. Finally, it calls for greater flexibility in price determination based on actual costs to accommodate price fluctuations in long-term projects, in accordance with the proposals of the International Islamic Fiqh Academy.

Item Type:	Article (Journal)
Uncontrolled Keywords:	Istisna’a,, Parallel Istisna’a, Standard, AAOIFI
Subjects:	B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc > BP1 Islam > BP100 Sacred books > BP140 Islamic law (Fiqh) H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Islamic Revealed Knowledge and Human Sciences > Department of Fiqh and Usul al-Fiqh
Depositing User:	Dr Mohd. Fuad Md. Sawari
Date Deposited:	29 Jul 2026 11:34
Last Update:	29 Jul 2026 11:34
Queue Number:	2026-07-Q4297
URI:	http://irep.iium.edu.my/id/eprint/130245

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