Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract
Purpose – This paper provides a case study on a Sharī‘ah-compliant house loan contract based on the Bai Bitham Ajil (BBA) contract generally used by Islamic banks in Malaysia. The study emphasises the need to comply with the existing legal framework and execute relevant contracts in line with the S...
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| Format: | Proceeding Paper |
| Language: | English English English English English |
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2014
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| Online Access: | http://irep.iium.edu.my/39488/ http://irep.iium.edu.my/39488/1/BBA_Housing_Loan_paper_03.11.2014.pdf http://irep.iium.edu.my/39488/3/MiCRA2014_CERTIFICATE.jpg http://irep.iium.edu.my/39488/4/MICRA2014_CD_COVER.jpg http://irep.iium.edu.my/39488/17/MiCRA_2014_BEST_AWARD_PAPER.pdf http://irep.iium.edu.my/39488/18/micra-2014-abstract-list.pdf |
| _version_ | 1848781792517029888 |
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| author | Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin |
| author_facet | Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin |
| author_sort | Oseni, Umar Aimhanosi |
| building | IIUM Repository |
| collection | Online Access |
| description | Purpose – This paper provides a case study on a Sharī‘ah-compliant house loan contract based on the Bai Bitham Ajil (BBA) contract generally used by Islamic banks in Malaysia. The study emphasises the need to comply with the existing legal framework and execute relevant contracts in line with the Sharī‘ah resolutions of the Sharī‘ah Advisory Council of Bank Negara Malaysia without causing harm (ḍarar) to the customers or introducing uncertain elements or procedures (gharar) in the execution of the agreements.
Design/methodology/approach – This paper is based on doctrinal analysis of the relevant issues as well as a qualitative legal research through content analysis of relevant BBA agreements, case law, as well as statutory provisions. The case study used in this paper is completely anonymised.
Findings – The study finds that the execution of BBA agreements in Malaysia leaves much to be desired. Even though the regulatory framework for Sharī‘ah-compliant housing loans in Malaysia is robust, there are some legal and Sharī‘ah considerations which the stakeholders need to look into in order to project Malaysia as the main global hub of Islamic finance.
Research limitations/implications – The study focuses only on Sharī‘ah and legal issues and does not touch on economic, financial or accounting aspects of the BBA housing loan contract.
Practical implications – This study demonstrates the need for proper Sharī‘ah auditing of the practical execution of BBA agreements to avoid an incorporated element of gharar at the time of execution of the agreements which might ultimately lead to unforeseen reputation risks for the bank.
Originality/value – Though there are several studies on the Sharī‘ah, financing, and accounting aspects of the BBA housing loan agreement, this study focuses on both Sharī‘ah and legal issues using the case study approach. The recommendations are expected to provide a good policy framework for the stakeholders in the Islamic banking industry in Malaysia.
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| first_indexed | 2025-11-14T15:55:12Z |
| format | Proceeding Paper |
| id | iium-39488 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English English English English English |
| last_indexed | 2025-11-14T15:55:12Z |
| publishDate | 2014 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | iium-394882021-07-19T09:02:54Z http://irep.iium.edu.my/39488/ Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin HG1501 Banking KBP173.25 Islamic law and other disciplines or subjects TX301 The house Purpose – This paper provides a case study on a Sharī‘ah-compliant house loan contract based on the Bai Bitham Ajil (BBA) contract generally used by Islamic banks in Malaysia. The study emphasises the need to comply with the existing legal framework and execute relevant contracts in line with the Sharī‘ah resolutions of the Sharī‘ah Advisory Council of Bank Negara Malaysia without causing harm (ḍarar) to the customers or introducing uncertain elements or procedures (gharar) in the execution of the agreements. Design/methodology/approach – This paper is based on doctrinal analysis of the relevant issues as well as a qualitative legal research through content analysis of relevant BBA agreements, case law, as well as statutory provisions. The case study used in this paper is completely anonymised. Findings – The study finds that the execution of BBA agreements in Malaysia leaves much to be desired. Even though the regulatory framework for Sharī‘ah-compliant housing loans in Malaysia is robust, there are some legal and Sharī‘ah considerations which the stakeholders need to look into in order to project Malaysia as the main global hub of Islamic finance. Research limitations/implications – The study focuses only on Sharī‘ah and legal issues and does not touch on economic, financial or accounting aspects of the BBA housing loan contract. Practical implications – This study demonstrates the need for proper Sharī‘ah auditing of the practical execution of BBA agreements to avoid an incorporated element of gharar at the time of execution of the agreements which might ultimately lead to unforeseen reputation risks for the bank. Originality/value – Though there are several studies on the Sharī‘ah, financing, and accounting aspects of the BBA housing loan agreement, this study focuses on both Sharī‘ah and legal issues using the case study approach. The recommendations are expected to provide a good policy framework for the stakeholders in the Islamic banking industry in Malaysia. 2014-11-06 Proceeding Paper PeerReviewed application/pdf en http://irep.iium.edu.my/39488/1/BBA_Housing_Loan_paper_03.11.2014.pdf application/pdf en http://irep.iium.edu.my/39488/3/MiCRA2014_CERTIFICATE.jpg application/pdf en http://irep.iium.edu.my/39488/4/MICRA2014_CD_COVER.jpg application/pdf en http://irep.iium.edu.my/39488/17/MiCRA_2014_BEST_AWARD_PAPER.pdf application/pdf en http://irep.iium.edu.my/39488/18/micra-2014-abstract-list.pdf Oseni, Umar Aimhanosi and Ayob, Mohd Fairullazi and Abdul Rashid, Khairuddin (2014) Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract. In: 13th Management in Construction Researchers' Association (MiCRA) Annual Conference and General Meeting 2014, 6th November 2014, Gombak, Kuala Lumpur. (Unpublished) http://micra14.wordpress.com/accepted-abstract/ |
| spellingShingle | HG1501 Banking KBP173.25 Islamic law and other disciplines or subjects TX301 The house Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract |
| title | Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract |
| title_full | Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract |
| title_fullStr | Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract |
| title_full_unstemmed | Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract |
| title_short | Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract |
| title_sort | sharī‘ah-compliant home financing in malaysia: a case study of legal issues in bai bithaman ājil contract |
| topic | HG1501 Banking KBP173.25 Islamic law and other disciplines or subjects TX301 The house |
| url | http://irep.iium.edu.my/39488/ http://irep.iium.edu.my/39488/ http://irep.iium.edu.my/39488/1/BBA_Housing_Loan_paper_03.11.2014.pdf http://irep.iium.edu.my/39488/3/MiCRA2014_CERTIFICATE.jpg http://irep.iium.edu.my/39488/4/MICRA2014_CD_COVER.jpg http://irep.iium.edu.my/39488/17/MiCRA_2014_BEST_AWARD_PAPER.pdf http://irep.iium.edu.my/39488/18/micra-2014-abstract-list.pdf |