Bai ( Buying & Selling) Presented by : Zubair Mughal CEO – AlHuda: Centre of Islamic Banking & Economics

Basic Rules of Bai Existence of Product/Commodity Ownership of Product/Commodity Possession of Product/Commodity

Basic Rules of Bai Unconditional basis Product have value/Price. Bai on Such product which is permissible in Islam.

Basic Rules of Bai Product Must be Identify, clear with all demanding Qualities. Not based on any incident, struggle etc Price must be clearly identified.

Bai (Buying & Selling) Basic Kinds of Bai

Kinds of Bai Bai Musawamah Bai Murabaha Bai Surf Bai Salam Bai Istisna’ Bai Urboon

Basic Kinds of Bai Bai Eenna Bai Touliya Bai Wadhia

Bai There are three basic type of Bai’s which are using in Islamic Banking as the mode of financing in Pakistan Murabahah Salam Istisna’

Murabahah Basically, it’s not a mode of financing but a source to avoid interest Dealing It’s not a type of loan, but a deal (Bai) Murabahah can be used as source of financing when client needs funds to purchase any product/Machinery etc.

Murabahah Sharing of Risk of loss differentiate Murabahah from the interest category Product Must be bought from third party for avoid buy back transaction Roll over is not Valid in Murabahah If actual cost can not be identified then Murabahah deal not possible.

Bai Important Note Following 3 Basic Rules of Bai are exceptional for Salam & Istisna’ Existence of Product/Commodity Ownership of Product/Commodity Possession of Product/Commodity

Salam Pay 100% amount in Advance. Product must be quantified, identified and Measured with quality. Date of delivery, Time, Place must be mentioned clearly in advance. Salam is not valid for a specific farm/land/garden.

Istisna’ Not necessary to pay the 100% amount in advance Like Bai salam. Price must be decided on beginning of the contract. Qualities, features of that product must be clearly identified.

Bai Differences Between Istisna and Salam

Istisna deal with manufacturing items, but Salam could or could not be manufacutred, but salam ideal of agriculture sector. In salam advance payment is necessary, but in Istisna’ its not.

Differences Between Istisna and Salam Date, time of delivery the necessary part of Bai Salam, But in Istisna, it is not the part of the deal. In Bai salam, it can be cancelled one sided, but in Istisna, it could be cancelled, if production is not started yet.

Type of Bai according to Quality Bai Salah Bai Fasid Bai Batil Bai Maqoof

Type of Bai according to Quality Bai Majool Bai Muqayaddah Bai Mu’ajal

Thank you