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0px 0.0px 0.0px; text-align: justify; font: 12.0px ‘Times New Roman’; -webkit-text-stroke: #444444; min-height: 15.0px}li.li4 {margin: 0.0px 0.
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s3 {color: #000000}span.s4 {font-kerning: none; background-color: #ffffff}span.s5 {text-decoration: underline}span.Apple-tab-span {white-space:pre}ul.ul1 {list-style-type: square}Introduction In this part of the assignment our group will discuss and analyse the understanding between Islamic banking and conventional banking system.
In a non technical terms, “Islamic Banking” is an Ethical Banking System, exercising the Syariah laws. The ambit of Islamic financing, “Interest is completely prohibited”. Islamic financing are benevolent loans that are interest or profit free. The contracts are technically not financing, but “Buy and Sell” or “Joint Partnership” agreements. The most common form is Bai Bithamin Ajil (BBA), a subset of the Murabahah concept. The principle underlying such forms of financing is the creditors should not take any advantage of the borrower.
Money when it is lent out on the basis of interest, more often that it leads to the injustice. On the other hand, the conventional bank practises debtor-creditor relationship. Interest is considered to be the price of credit reflecting the opportunity cost of money. Circumstances for not granting Order for SaleDoes the Syariah permit financing involving property under construction? In Islamic Finance litigation, it is quite common to see defence of illegality and Shariah non-compliance being raised by counsel. First, the existence and description of the underlying asset.
In FLH ICT Services Sdn Bhd & Anor v Malaysian Debt Venture Bhd 2016 1 CLJ 243, the Court of Appeal dismissed a claim allegedly based on bai’al-inah transaction since the underlying asset was absent. In Pripih Permata Son Bhd v Bank Muamalat Malaysia Berhad 2015 6 CLJ 135, the High Court decided the Property Purchase Agreement (PPA) and Property Sale Agreement (PSA) as null and void because the subject matter (mahal al-‘aqad) does not actually exist at the time of the conclusion of contract. This is a case involving financing facility for under construction property. Hence, it was finally decided by the Judge under Order 14A ROC 2012 that there was element of major uncertainty (Gharar al-fahish) in the financing transaction. This is also to be in conjunction with the establishment of ’cause to contrary’ in Low Lee Lan v Ban His Lee Bank Bhd 1997 1 MLJ 77 which falls under para (c). ? Foreclosure Proceedings – Application on Order For Sale (case study)Arab-Malaysian Merchant Bank Bid v Silver Concept San Bid 2005 5 MLJ 210 The Plaintiff in this case was a bank incorporated in Malaysia. The defendant was a company and the beneficial owner of a large tract of land. The land was originally owned by a company (the original owner).
By sale and purchase agreement, the defendant had bought the land from the original owner. To part finance the acquisition of the land, the defendant had requested a consortium of financial institution (the vendors) with the plaintiff as the arranger and agent to help out. The assistance sought for was Islamic based facilities. The defendant
