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Management of fatwa standardisation on the practice of bay’ ‘inah contract in Malaysia: an analysis according to usul al-Fiqh and mura’aht al-Khilaf method

Fathullah Asni (Faculty of Shariah, Kolej Universiti Islam Perlis, Perlis, Malaysia)

Qualitative Research in Financial Markets

ISSN: 1755-4179

Article publication date: 19 October 2020

Issue publication date: 7 June 2021




This study aims to investigate the practice of bay’ ‘inah contract in personal and home financing products by some Islamic Finance Institutions (IFIs) and examine the differences in the selection of contracts in banking products amongst IFIs mainly involving personal financing. The study will also propose a solution to the problem of differences and simultaneously standardise personal financing contracts in Malaysia.


The methodology of this study is qualitative, in which the data are collected through library research and field studies. The library research is done by examining books of usul al-fiqh (principles of Islamic jurisprudence), mura’aht al-khilaf, maqasid shariah (objectives of Islamic law) articles, statutes and related circulars, while field studies are conducted in an unstructured interview method with some members of Shariah Advisory Council (SAC) and academicians from Bank Negara Malaysia (BNM), IFIs and public university.


The findings show that there is a difference in views amongst SAC members in IFIs on bay’ ‘inah contract that effects the differences in the execution of such contract in banking applications. The study found that the bay’ ‘inah contract was non Shariah (Islamic law) compliant based on Shariah’s arguments and the opinion of the majority of past and present Islamic scholars. The study found that the BNM’s SAC did not allow the bay’ ‘inah contract to be practiced in personal and home financing products. Hence, this study proposes standardisation steps based on differences in the problems studied. The study also suggested that the SAC of BNM make improvements and updates on its solution regarding the bay’ ‘inah contract so that it is not misunderstood especially amongst IFIs.

Research limitations/implications

The study is only looking at one case study, which is the bay’ ‘inah contract practiced by the IFIs in Malaysia.

Practical implications

This study proposes the standardisation of personal financing products practiced by the IFIs. The results of this study can reduce Sharīʿah non-compliance products in the market. The results of this study have gained a deep understanding of the solution of bay’ ‘inah contract made by the SAC of BNM. The findings also reduce the conflict between Shariah scholars locally and internationally and can restore the image of Islamic banking in Malaysia from engaging with controversy products or contracts.

Social implications

The confidence of the public in Islamic banking is increasing as there is no contractual engagement with serious controversial issues and contracts similar to the concept of riba and hilah (trick) that is prohibited by Islamic law in IFIs.


This study analyses the differences of fatwa (a ruling on the point of Islamic law) about bay’ ‘inah contract decided by some SACs of IFI based on the discipline of usul al-fiqh. The study found that the bay’ ‘inah contract is not allowed by Islamic law. The study has proposed the standardisation of the fatwa differences based on the concept of mura’aht al-khilaf and the concept of standardisation in Islamic finance and to standardise personal financing products amongst IFIs in Malaysia.



Asni, F. (2021), "Management of fatwa standardisation on the practice of bay’ ‘inah contract in Malaysia: an analysis according to usul al-Fiqh and mura’aht al-Khilaf method", Qualitative Research in Financial Markets, Vol. 13 No. 1, pp. 118-139.



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