Application of Constructive Possession (Qabd Hukmi) In Islamic Banking Products: Shariah Analysis

Abstract

Possession is one of the fundamental elements to acquire wealth in a valid manner. Financial contracts will not be concluded and irrevocable without possession of respective subject matter. It has been observed that in contemporary Islamic banking products and transactions mostly, not the real, but a legal or constructive possession is practiced, and in this context the customary practices play a significant role in determining the proper mode of possession. Thus, this effort intends to investigate the essence of possession and its appropriate mode for contemporary Islamic financial transactions. This is a library-based research and it has adopted qualitative document and content analysis. The classical references to prominent Schools of Islamic law have been utilized as the primary tools to perform this analysis and investigation. The study finds out that the essence of possession is to relinquish it to the merchandise and its rightful beneficiary, so that it can be enjoyed without any interruption. It posits that the mode of possession would be varied subject to the nature of the commodity itself.

Shariah Issues of Ownership and Possession of Asset-Based Sukuk Structure: A Shariah Scholars’ Perspective

“…In addition, such a transaction where the asset is not owned or possessed by the seller could lead to a Shariah issue, namely beneficial ownership in asset-based Sukuk, which could trigger a problem in case the issuer defaults and Sukuk holders have not possessed or owned the underlying asset of Sukuk (Nada et al, 2016). Some hadiths mentioned the prohibition of reselling the asset before taking possession (Rahman, 2020). Qabd implies receipt or possession of something so that the new buyer can carry out the contractual disposition of the asset without any hindrance (Alam et al, 2017).…”

“…The Malik scholars confined the application of the hadith on possession to food grains, implying that some other class of items, such as palm oil and cotton, may be sold before collection. Ibn Umar cited Prophet Muhammad (PBUH) as saying, "Whoever buys food, he should not resell it before he takes possession of it" (Sunan Abu Dawud; Rahman, 2020;AAOIFI, 2010).…”

“…This resulted from the worry that the goods may not be delivered because of damage or other issues. Along this line, Islam prohibits any transactions, including bay al ma'dum, as the delivery of the subject matter cannot be performed and may cause gharar (Rahman, 2020).…”

Waqf Land Development for Private Tahfiz Schools in the State of Perlis, Malaysia: Procedures and Advantages

“…In addition, such a transaction where the asset is not owned or possessed by the seller could lead to a Shariah issue, namely beneficial ownership in asset-based Sukuk, which could trigger a problem in case the issuer defaults and Sukuk holders have not possessed or owned the underlying asset of Sukuk (Nada et al, 2016). Some hadiths mentioned the prohibition of reselling the asset before taking possession (Rahman, 2020). Qabd implies receipt or possession of something so that the new buyer can carry out the contractual disposition of the asset without any hindrance (Alam et al, 2017).…”

“…The Malik scholars confined the application of the hadith on possession to food grains, implying that some other class of items, such as palm oil and cotton, may be sold before collection. Ibn Umar cited Prophet Muhammad (PBUH) as saying, "Whoever buys food, he should not resell it before he takes possession of it" (Sunan Abu Dawud; Rahman, 2020;AAOIFI, 2010).…”