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A Learn B Share C Identify Issues D Make Things Better

Maybank 90% RM117,000 Maybank 90% RM117,000 Customer 10% RM13,000 Customer 10% RM13,000 RM 130,000 Initial Capital Contribution

Rent Tenure: 38years, 456month Margin of profit:Margin of profit: BFR-1.6% per annum Current BFR- 6.3% Early Settlement Penalty ClausePenalty Clause 3.5% of the original financing amount RM 5000, whichever is higher See spreadsheet sheet 1

Suggestion of Rent

Balance sheet of Maybank Islamic Berhad (March, 2010)

Time Of Contracting - Bank's Share Is Recognized Under The Title 'Musyarakah Mutanaqisah Financing' Repayment Of Capital By Customer - Bank's Share Declines As The Customer's Share Increaes Per Each Payment Musyarakah Mutanaqisah Financing XXX Cash XXX Musyarakah Mutanaqisah Financing XXXX

Rental payment - Periodic rental amonuts will be jointly shared between the bank and the customer accoding to the percentage share holding at the particular times which Keeps changing as the customer purchases the bank's shares. Cash XXX Profit And Loss XXX

 Disclosure on Capital Adequacy

 "The very objective of the Shariah (Maqasid Shariah) is to promote the welfare of the people which lies in safeguarding their faith, their life, their intellect, their posterity and their property. Whatever ensures the safeguard of these five serves public interest and is desirable." Imam Al Ghazali  “One purpose of the Shariah is the preservation and protection of the basic necessities (daruriyat) of man without which life would probably be filled with anarchy and chaos and thus become meaningless. Professor Rosly.  Shariah aims at protecting and preserving public interests (maslahah) in all aspects and segments of life.

example

Legality of MM

The bank

The customer

In Islam the concept of right is defined as haqq. Primarily, Al-Haqq is one of the names of Allah (SWT) meaning “The Truth” and is mentioned more than 200 times in the Holy Qur’an. That is because Allah— He is the Truth, and what you call upon besides Him is falsehood. Allah is the All-High, the Most Great. (Surah Luqman, 31:30)

O you who believe! When you deal with each other, in transactions involving future obligations in a fixed period of time, write it down. Let a scribe write it down in justice between you……Let him (the debtor) who incurs the liability dictate, and he must fear Allah, his Lord, and diminish not anything of what he owes……..And get two witnesses out of your own men. You should not become weary to write it (your contract), whether it be small or big, for its fixed term, that is more just with Allah ; more solid as evidence, and more convenient to prevent doubts among yourselves…. But take witnesses whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All- Knower of each and everything. (Al-Baqarah, 282)

In Shariah haqq is “the exclusive power over something or demand addressed to another party which the Shariah has validated in order to realise a certain benefit”. Based on this commercial right is confined to rights having monetary value (qima maliyya).

Rights over Property The Bank’s rights The right of entry or re-entry for the purpose of inspection of the property; The right to cure any defects of the property (but shall not at any time impose any obligation upon the Bank to rectify such defects); The right to approve any significant improvements to the Property (but such right shall not impose any obligation upon the Bank to pay for such improvements) The Customer’s rights The sole and exclusive right to occupy the Property; The right to purchase the ownership shares of the Bank in the Property at any time subject to the terms of this Facility.

Default Event In theory In the event of customer default, the contract will be cancelled. Without wa’d (promise to purchase) the property will be sold and theprofit will be divided according to the ownership shares of the bank and the customer. With wa’d, the customer has to to acquire the bank’s remaining share of the property. This creates a debt to be paid by the customer to the bank. In the case The Bank may terminate the contract if the Customer: Defaults or fails to pay any monthly payments of the home/Shop house Equity-i, the monthly rental or any other sums of money payable on its due date to the Bank There is no wa’d in the partnership.

Damages to the Property All certificates will be taken up at the Customer’s costs and expenses The Bank requires the Property to be protected by Home Building/Fire Takaful certificate:

Property valuation and Rental reconsideration In the case The Bank may time to time require the Property to be valued or revalue by the Bank’s appointed valuers at the cost of the Customer The monthly payment and acquisition payment may vary at any time at the Bank’s discretion. In theory A property should be valued only when there is a sale of the property which would involve the full transfer of ownership. Meera & Razak (2010) The monthly rental could be reviewed at any time throughout the duration of the contract subject to consent of both parties. The customer may not be able to afford a new rental payment.

Bibliography and references  Rosly, Saiful Azhar (2010) “Shariah Parameters Reconsidered”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 3, No 2, 2010, pp  Meera, Ahamed Kameel Mydin, & Abdul Razak, Dzuljastri (2009) “Home Financing through the Musharakah Mutanaqisah Contracts: Some Practical Issues”, Journal of King Abdul Aziz University: Islamic Economics, Vol. 22 No. 1, 2009, pp   Osmani, Noor Mohammad & Abdullah, Md. Faruk (2010) “Musharakah Mutanaqisah Home Financing: A Review of Literatures and Practices of Islamic Banks In Malaysia” International Review of Business Research Papers, Vol. 6, No. 2, 2010 pp

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