Tawarruq which is also known as commodity Murabahah in Islamic banking is widely practiced in Malaysia to structure different types of Islamic banking products. The widespread use of tawarruq has made Islamic banks to be re-named as “tawarruq banks” and some even call tawarruq as the “magic lamp” of the industry. Shariah scholars have criticised this frequent usage of tawarruq in Islamic banking industry of Malaysia, while the practitioners have replied by saying that if tawarruq is a shariah approved concept, then what is wrong with the usage of it? However, from the shariah perspective, the issue here is not about the shariah compliance of tawarruq transactions per se. It is about the shariah limitations imposed by the scholars on the use of it. This simply means that there is a reservation made by shariah scholars in allowing the usage of tawarruq contract in Islamic finance as tawarruq is a contract allowed to be used when one has to choose between a conventional loan and tawarruq. The purpose of this research is thus to show the alternative Islamic commercial contracts that could be used to structure Islamic banking products that have been structured in the market using tawarruq. It is anticipated that the outcome of this research will assist Islamic banking industry to understand why and how they can move away from tawarruq.
Purpose This paper aims to explore issues arising from ṣukūk (Islamic bonds) on blockchain, including Sharīʾah (Islamic law) and legal matters. Design/methodology/approach A qualitative methodology is used in conducting this research where relevant literature on ṣukūk was reviewed. Through a doctrinal approach, the paper presents analyses on the practice of ṣukūk and ṣukūk on blockchain by discussing its legal, Sharīʾah and regulatory issues. This culminates in a conceptual analysis of blockchain ṣukūk and its peculiar challenges. Findings This paper reveals that digitizing ṣukūk issuance through blockchain remedies certain inefficiencies associated with ṣukūk transactions. Indeed, structuring ṣukūk on a blockchain platform can increase transparency of underlying ṣukūk assets and cash flows in addition to reducing costs and the number of intermediaries in ṣukūk transactions. The paper likewise brings to light legal, regulatory, Sharīʾah and cyber risks associated with ṣukūk on blockchain that confront investors, practitioners and regulators. This calls for deeper collaboration in research among Sharīʾah scholars, lawyers, regulators and information technology experts. Research limitations/implications As a pioneering subject, the paper notes the prospects of blockchain ṣukūk and the current dearth of literature on it. The paper would assist relevant Islamic capital market entities and authorities to determine the potential and impact of blockchain ṣukūk in their respective businesses and the financial system. Practical implications Blockchain ṣukūk will assist in addressing issues inherent in classical ṣukūk and in paving the way to innovative solutions that will facilitate and enhance the quality of ṣukūk transactions. For that, ṣukūk would require appropriate regulatory technology to address its governance and regulation peculiarities. Originality/value Integrating ṣukūk with blockchain technology will add value to it. The paper advances the idea that blockchain ṣukūk revolutionises ṣukūk and enhances its practice against known inadequacies.
The objective of the paper is to discuss the application of tawarruq in Islamic banking generally. The modus operandi of tawarruq in Islamic banking is an essential discussion in jurisdiction like Malaysia, where most Islamic banks use tawarruq to structure Islamic banking products. This paper employs a systematic literature review on best practice models and mechanism of current tawarruq application. The outcome of the research helps to understand the modus operandi of tawarruq transactions practically with a view towards understanding its future prospects in the era of Fintech. It is envisaged that this research will assist the growing understanding of the existing application of tawarruq in Islamic banking as well as its future development using technology.
Purpose This paper aims to examine existing Halal certification regime in Maldives and address impediments therein that challenge and inhibit the growth of the country’s Halal industry in relation to fisheries products. Design/methodology/approach This is qualitative research based on first-hand experiences of the authors in the Halal certification process in the Maldives. Doctrinal methodology is used in the analysis of primary sources of data, including Maldivian laws and Halal certification regulations to identify issues of practical relevance. This is complemented with content analysis of secondary data sourced from journal articles, books, reports and online databases that were examined in identifying hindrances and loopholes in the Halal certification process. Findings Fish is generally Halal, but processed fisheries products cannot be so deemed when certain additives and enhancers are constituents therein. At the moment, Maldives Halal certification pertains only to fisheries products. Against this backdrop, this research identifies knowledge gap, legal and governance constraints pertaining to capacity as impediments towards the Halal certification of such products in the Maldives. Such concerns hinder the Maldives from tapping the socio-economic benefits of the Halal certification of its fisheries products to the desired level in the development of its Halal industry. Research limitations/implications This is pioneer research with reference to the Maldives. Absence of researches on the subject brings about scantily available secondary data in the area. Moreover, no empirical data were involved in conducting the research. Practical implications As the only products subject of Halal certification process, this research offers an insight into the regulations underpinning Halal certification of fisheries products and related impediments thereto in developing the Maldivian Halal industry generally. Identifying and understanding the impediments to Halal certification process would facilitate their elimination and promote Halal certified fisheries products. Originality/value This research highlights and evaluates the Halal certification regime in the Maldives and provides a starting point for further research thereon. The research contributes towards making robust and standard Halal certification criterion and paves the way forward for developing the Halal industry in the Maldives.
Purpose -This paper aims to highlight resolution of Islamic finance dispute by common law-oriented courts in Nigeria with respect to Sharīʿah non-compliance and legal risks thereof, as well as the lesson to learn from Malaysia in that regard. This is with view to ensuring Sharīʿah compliance and legal safety of Islamic finance practice as prerequisites for sustainability of the Nigerian Islamic finance industry.Design/methodology/approach -A qualitative method was used; interviews were conducted with different categories of experts and primary data collected in relation to Sharīʿah non-compliance and legal risks in adjudicating Islamic finance dispute by civil courts and the role of expert advice as basis for court referral to Financial Regulation Advisory Council of Experts. A doctrinal approach was adopted to analyse relevant legislative provisions and content analysis of secondary data relevant to applicable provisions in matters of finance before civil courts.
Purpose There is a misconception that Hajj and Umarah is just a worship matter and the consequences of suspending these religious gathering due to the pandemic is only limited to delay of going Saudi Arabia to perform it. However, the purpose of this paper is to focus on the impact of the pandemic in Hajj and Umrah by exploring its impact on different stakeholders affecting its disruption due to the pandemic. Design/methodology/approach This is a library-based study that uses qualitative method to explore the impact of COVID-19 on Hajj and Umrah. Thus, provisions of Quran and hadith on Hajj and Umrah were examined as primary data for the research to establish the importance of the rituals in Islam. Guidelines set by Hajj regulators and instruments enabling them in that behalf were examined likewise. In addition, content analyses were made of relevant secondary data from published sources including articles, books, newspapers and web resources that embody scholarly, scientific and religious views on the issue being studied. Findings It is realised that in the first year of the pandemic, while Umrah is entirely suspended, Hajj was scaled back and performed by 10,000 people altogether, a tiny segment of the over two and half million that partook in the ritual previously. Hajj and Umrah have been greatly inhibited and jeopardised by the COVID-19 pandemic resulting in religious, social, economic, psychological effects on the eligible but affected Muslims and Muslims countries. Along these lines, recommendations were accordingly proffered on the way forward to better Hajj and Umrah management. Originality/value It is anticipated that the findings of the research would assist policy makers to comprehend the impact of the pandemic on Hajj and Umrah to ensure that the policies they make in this regard would adequately cover every aspect affecting the stakeholders which is deliberated in this research. It is also expected that the recommendations provided in this paper will assist stakeholders of Hajj and Umrah to grasp the importance of taking precautions for any crisis similar to COVID-19 when it happens.
Purpose The purpose of this paper is to review the literature on Islamic finance vis-à-vis legal and Sharīʿah non-compliance risks in its transactions and judicial dispute resolution in Nigeria. This is with a view to putting forward direction for future studies on the duo of legal and Sharīʿah non-compliance risks and their impact in Islamic finance. Design/methodology/approach This review is designed as an exploratory study and qualitative methodology is used in examining relevant literature comprising of primary and secondary data while identifying legal risk and Sharīʿah non-compliance risks of Nigeria’s Islamic finance industry. Using the doctrinal approach together with content analysis, relevant Nigerian laws and judicial precedents applicable to Islamic finance practice and related publications were examined in determining the identified risks. Findings Undeveloped laws, the uncertainty of Sharīʿah governance and enforceability issues are identified as legal gaps for Islamic finance under the Nigerian legal system. The gaps are inimical to and undermine investor confidence in Nigeria’s Islamic finance industry. The review reveals the necessity of tailor-made Sharīʿah-based regulations in addition to corresponding governance and oversight for a legally safe and Sharīʿah-compliant Islamic finance practice. It brings to light the imperative for mitigating the legal and Sharīʿah non-compliance risks associated with Islamic finance operations as crucial for Islamic finance businesses, Islamic finance institutions and their sustainable development. Research limitations/implications Based on content analysis, the review is wholly doctrinal and does not involve empirical data. Legal safety and Sharīʿah compliance are not to be compromised in Islamic finance operations. The review would assist relevant regulators and investors in Islamic financial enterprises to understand and determine the impact and potential ramifications of legal safety and Sharīʿah non-compliance on Islamic Finance Institutions. Practical implications This study provides an insight into the dimensions and ramifications of legal and Sharīʿah non-compliance risks of Nigeria’s Islamic finance industry. This study is premised on the imperative for research studies whose outcome would inform regulations that strike a balance between establishing Islamic financial institution/business and ensuring legal certainty and Sharīʿah compliance of their operations. This study paves way for this kind of research studies. Originality/value The findings and discussions provide a guide for regulators and researchers on the identification and mitigation of legal and Sharīʿah non-compliance risks in Islamic finance via a literature review. This study, the first of its kind in Nigeria, advances the idea that research into legal and Sharīʿah non-compliance risks of Islamic financial entities is key to mitigating the risks and fostering the entities and their businesses.
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