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Archive for June 2009

Islam allows organised tawarruq asset sales – scholar

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Points of Essence

  • Organized tawarruq is sought to be used as a financing and liquidity management tool despite differing views fromIslamic scholar due to its role in debt creation rather than real economic activity.  It is suggested that there has to be a balance between the two necessities to leverage on this potential Shariah principle in this thriving Islamic financial industry. Under the same development, Malaysian stock exchange plans to launch tawarruq based platform to execute commodity murabaha transactions. The Arabian Business has the details.

Liau Y-SingThis email address is being protected from spam bots, you need Javascript enabled to view it // <![CDATA[
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on Thursday, 04 June 2009

The Islamic financing structure of organised tawarruq should be allowed, a top Malaysian religious scholar said on Thursday, weighing in on an issue that has divided the $1 trillion industry.

Tawarruq is widely used as a financing and liquidity management tool but sharia jurists differ on its permissibility.

Most scholars sanction its use although some prominent jurists from the Hanbali school of thought have said it is legal trickery similar to another controversial contract which has been likened to interest-based financing.

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Written by Suapi Shaffaii

June 4, 2009 at 4:10 pm

Posted in General Issue

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