Moratorium in Islamic hire purchase financing: A Shariah perspective
Total Views: 1245
DOI:
https://doi.org/10.33102/jmifr.v18i2.367Keywords:
Moratorium, AITAB, Bank Negara Malaysia, COVID-19Abstract
This study examined the implementation of moratorium in the Islamic hire purchase financing based on Al-Ijarah Thumma Al-Bay’ (AITAB) from the Shariah perspective. The implementation of moratorium by Bank Negara Malaysia (BNM) is a new practice in the banking and finance industry in Malaysia. Implementing the moratorium causes several changes to the AITAB contract such as the extension in contract tenure and the increase in the total payment obligation due to the profit charged on the outstanding principal. This study analysed these changes from the Shariah perspective by using the al-takyif al-fiqhi methodology. The results of the analysis confirm the practice of moratorium by IFIs is in line with the Shariah requirements as long as it is agreed by the parties to the contract - which are the bank and the customer. Needless to say, both Ijarah Policy Document and Hire Purchase Act 1967 allow any forms of amendments including profit compounding when the AITAB contract is restructured, provided that such amendments are agreed between the contracting parties. Despite this permissibility, IFIs are still required to comply with the new ruling issued by SAC BNM that prohibits the practice of profit compounding during the COVID-19 crisis. Although, in principle, the ruling is based on the concept of ihsan (beneficence) which is not compulsory (wajib) but rather recommendation (istihbab) from the Shariah perspective; however, from the regulatory perspective the ruling is compulsory for IFIs to comply pursuant to section 28(1) and 28(2) of Islamic Financial Services Act 2013 (IFSA) that stated compliance with Shariah means compliance with any ruling of the Shariah Advisory Council. The moratorium is seen as a manifestation of the concept of ihsan (beneficence) towards the customers affected financially due to the COVID-19 pandemic. This commendable effort should be encouraged and continued by the Islamic financial institutions in upholding the Shariah principle of maslahah and lifting of difficulties (raf al-haraj), particularly in the current outbreak of COVID-19 and the impact of MCO.
Downloads
References
Accounting and Auditing Organization for Islamic Financial Institutions. (2015). Shariah standards. https://aaoifi.com/shariaa-standards/?lang=en
Abu Daud, S. B. al-A. bin I. al-S. (1900). Sunan Abi Daud (Volume 3). Al-Maktabah al-’Asriyyah.
Abu Zakaria Yahya bin Sharafuddin, A. N. (1995). Al Majmu’ Syarah Al Muhazzab (Vol. 9). Dar al-Fikr.
‘Ali ibn Khalaf, I. B. (2003). Sharh sahih al-bukhari (2nd ed.). Maktabat al-Rushd.
Ali, M. M., & Ismail, F. A. (2020, May 27). Repayment moratorium in Malaysian Islamic banks. Islamic Finance News. https://www.researchgate.net/publication/342978088_Repayment_Moratorium_in_Islamic_Banks_in_Malaysia
Al-Khin, M., Al-Bugha, M., & Al-Syarbaji, A. (1992). al-Fiqh Manhaji Ala al-Mazhab al-Imam al-Syafie (Vol. 8). Dar al-Qalam.
Al-Mausu’ah al-Fiqhiyyah. (1984). Wizarat al-Awqaf wa al-Shu’un al-Islamiyyah.
Al-San’ani Muhammad bin Ismail bin Salah al-Amir al-Yamani. (n.d.). Subul al-Salam (volume 2). Dar al-Hadith.
Al-Sanadi Muhammad bin Abd al-Hadi Abu Al-Hasan. (1980). Sharh Sunan Ibn Majah al-Qazwini (Volume 2). Dar al-Jayl.
Al-Tirmidhi Abu ’Isa Mohammad Ibn ’Isa. (2007). English Translation of Jami’ al-Tirmidhi (volume 3) (Hafiz Abu Tahir Zubair ’Ali Za’i (1st ed.). Darussalam.
Al-Zuhayli, W. (2008). al-Fiqh al-Islami wa Adillatuhu (Volume 5). Dar al-Fikr.
Bank Negara Malaysia. (2018). Ijarah contract policy document. https://www.bnm.gov.my/index.php?ch=57&pg=137&ac=530&bb=file
Bank Negara Malaysia. (2020a). Economic and financial developments in Malaysia in the second quarter of 2020 (Issue August). https://www.bnm.gov.my/files/publication/qb/2020/Q2/Q2_en.pdf
Bank Negara Malaysia. (2020b). FAQs on deferment package and conversion package (Issue 21 April). https://www.bnm.gov.my/index.php?rp=en_faqcovid19loan
Bank Negara Malaysia. (2020c). FAQs on hire-purchase and fixed rate islamic financing products. https://www.bnm.gov.my/documents/20124/883228/FAQ+on+HP+_+Islamic+FR_070520.pdf
Bank Negara Malaysia. (2020d). Keputusan Majlis Penasihat Shariah Bank Negara Malaysia (MPS) berhubung penstrukturan dan penjadualan semula pembiayaan secara Islam sewaktu krisis COVID-19: Mesyuarat Khas MPS ke-30 bertarikh 14 Julai 2020 (semakan semula pada 16 Oktober 2020). https://www.bnm.gov.my/documents/SAC/SAC Statement 30th SAC Special meeting (revised) BM 16102020.pdf
Bank Negara Malaysia. (2020e). Measures to assist individuals, SMEs and corporates affected by COVID-19. https://www.bnm.gov.my/index.php?ch=en_press&pg=en_press&ac=5018&lang=en
Bank Negara Malaysia. (2020f, April 30). Operationalisation of moratorium for hire-purchase loans and fixed rate Islamic financing. https://www.bnm.gov.my/index.php?ch=en_press&pg=en_press&ac=5042
Bank Negara Malaysia. (2020g, April 21). Supplementary FAQs on deferment package and conversion package (Issue 7 April). https://www.bnm.gov.my/o/covid-19/FAQ Supplementary - Deferment & Conversion.pdf
Bank Negara Malaysia. (2020h, October 19). Targeted repayment assistance. https://www.bnm.gov.my/o/covid-19/tra_en.html
Bank Negara Malaysia. (2020i, August 10). The Shariah Advisory Council of Bank Negara Malaysia (SAC) ruling on restructuring and rescheduling of Islamic financing facility during COVID-19 crisis.
Islamic Financial Services Act 2013, 1 (2013). https://www.bnm.gov.my/documents/20124/8102422b-e6dd-d149-8db0-e3637e89ed5c
Ghuddah, A. S. A. (1998). Ijarah (Lease). In Dallah Al-Baraka Group Al-Baraka Banking Group (ABG) Department of Research & Development. http://www.albaraka.com/media/pdf/Research-Studies/RSIJ-200706201-EN.pdf
Hasbullah, N. A., & Rahman, A. A. (2020). Peranan pemegang taruh dalam menjaga kebajikan ekonomi rakyat semasa pandemik COVID-19 dari perspektif ekonomi Islam. The Journal of Muamalat and Islamic Finance Research, 17(Special Issue), 71–89.
https://doi.org/10.33102/jmifr.v17i3.285
Hayes, A. (2020). Moratorium. Investopedia. https://www.investopedia.com/terms/m/moratorium.asp
Hire Purchase Act 1967, 1. (2016). Testimony of AGC Malaysia. http://www.agc.gov.my/agcportal/uploads/files/Publications/LOM/EN/Act 212 - Hire-Purchase Act 1967.pdf
Ibn Majah Abu Abdullah Muhammad Ibn Yazid al-Qazwini. (1952). Sunan Ibn Majah. Dar Ihya’ al-Kutub al-’Arabiyyah.
Ibn Majah Muhammad Bin Yazeed al-Qazwini. (2007). English Translation of Sunan Ibn Majah (Volume 3) (Hafiz Abu Tahir Zubair ’Ali Za’i (Ed.); 1st ed.). Darussalam.
Khairuldin, W. M. K. F. W., Hassan, S. A., Anas, W. N. I. W. N., Mokhtar, W. K. A. W., & Embong, A. H. (2020). Al-takyif al-fiqhi and its application in Islamic research methodology. Journal of Critical Reviews, 7(07), 462–467. https://doi.org/10.31838/jcr.07.07.80
Laldin, M. A., & Furqani, H. (2018). Islamic Financial Services Act (IFSA) 2013 and the Shariah-compliance requirement of the Islamic finance industry in Malaysia. ISRA International Journal of Islamic Finance, 10(1), 94–101. https://doi.org/10.1108/IJIF-12-2017-0052
Majallat al-Ahkam al-Adliyyah. (n.d.).
Majlis Keselamatan Negara. (2020). Perintah Kawalan Pergerakan (Movement Control Order). https://www.mkn.gov.my/web/ms/covid-19/
Malik, M. I. A. I. (1985). Muwatta’ al-Imam Malik (Vol. 1). Dar al-Ihya al-Turath al-’Arabi.
Mat Ali, S. A., Arshad, A., & Ibrahim, I. (2021). Relief measures of Islamic finance in combating adverse impacts of COVID-19 in Malaysia: An analysis. International Journal of Law,
Government and Communication, 6(24), 116–134. https://doi.org/10.35631/IJLGC.624008
Miuhammad, I. A. B. (2001). Sahih al-Bukhari (1st ed.). Dar Touk Al-Najah.
Muhammad Uthman Shubair. (2014). At-Takyif al-Fiqhi lil Waqi’ al-Mustajiddah wa Tatbiqatuhu al-Fiqhiyyah. Dar al-Qalam.
Mohd Dali, N. R. S., Abdul Hamid, H., Wan Nawang, W. R., & Nazarie, W. N. F. W. M. (2020). Post pandemic consumer behavior: Conceptual framework. The Journal of Muamalat and Islamic Finance Research, 17(Special Issue), 13–24. https://doi.org/10.33102/jmifr.v17i3.280
Qudamah, A. I. A. I. M. I. (1968). Al-mugni li ibni qudamah. Maktabah al-Qahirah.
Rahman, M. A., Zaman, N., Asyhari, A. T., Al-Turjman, F., Alam Bhuiyan, M. Z., & Zolkipli, M. F. (2020). Data-driven dynamic clustering framework for mitigating the adverse economic impact of COVID-19 lockdown practices. Sustainable Cities and Society, 62(May), 102372. https://doi.org/10.1016/j.scs.2020.102372
Sabiq, S. (1977). Fiqh al-Sunnah. Dar Kitab al-Arabi.
Shaharuddin, A. (2020). Do Islamic banks act ‘Islamic’ during COVID-19 pandemic? The Journal of Muamalat and Islamic Finance Research, 17(Special Issue), 3–12. https://doi.org/10.33102/jmifr.v17i3.279
Stovall, H. L. (2014). Silence as acceptance in contract: A brief summary of Arab Middle Eastern law. In Law Office. https://www.stovall-law.com/files/2019-07-24_17_09_15_silence_as_acceptance_2014.pdf
Yi, L. Y. (2020). MoF: Banks agree to waive additional charges on HP loans. The Edge Markets. https://www.theedgemarkets.com/article/banks-waive-interestprofit-charge-hp-loans-fixed-rate-financing-during-moratorium-period
Published
How to Cite
Issue
Section
Copyright (c) 2021 Azmuddin Razali, Mohammad Amir Wan Harun
This work is licensed under a Creative Commons Attribution 4.0 International License.
