It is not the permissibility of murabahah contracts per se but their indiscreet use and faulty structuring — guaranteeing in many cases not only a fixed profit rate bench marked on interest but also the return of the principal through buy-back provisions — which is fueling the perception that from Islamic banks interest is out but interest is in; it only walks in an Islamic cloak, writers Prof Dr Zubair Hasan.
Of late, he noted that even Bank Negara Malaysia govenor Tan Sri Dr Zeti Akhtar Aziz has advised Islamic banks to curb the temptation of using fixed return transactions.
"Presumably, it is time to apply the principle of saad-aldharai that closes the potential avenues for circumventing the Shariah: more so its objectives and spirit," he wrote in a commentary published by The Malaysian Reserve yesterday (Jan 12, 2009).
Prof Zubair, the Professor of Islamic Economics and Finance at the International Centre for Edation in Islamic Finance (INCEIF), writes that some elating developments have taken place in the area of Islamic finance during the preceding year, noting a fast expansion in its market share, diversification of products picked up pace and the rapid globalisation of the services ensures their future expansion.
"But of no less consequence may prove, I feel, the lurch one finds commodity murabahah in at the close of the year," he said.
Commodity murabahah is one of the most commonly used financing contracts in Islamic banking. It falls in the same generic category of "uqud al-mu'awadhat" or exchange contracts that covers all types of transactions including most sukuk as well.
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