10% with a nominal mark-up of $100,000.But now, the question is how should the bank explain the $100,000profit they make from the BBA sale as legitimate (
)? Recall the‘iwad or equivalent contervalue is the condition for a lawful sale. Any increase, according to the majority of jurists in the Shafi’, Hanafi,Maliki, and Hanbali schools must contain ‘iwad.To benefit from these increases, Islamic banks must be able to providesomething of equal value in return. Hence, when someone pays$200,000 on BBA financing at $100,000 cost price, what is the natureof ‘iwad he receives from the bank in exchange for the $100,000 profit?Certainly, if the transaction is made on the spot or cash basis, problemon the nature of lawful and unlawful gains should not have risen sinceno time element is involved here. Which means that the bank purchasesthe goods at direct or wholesale price, it assumes the risk of ownership. While doing so, the bank sells the goods to the customer for $200,000on cash term.The legitimacy of the profit made is irrelevant since the bank has indeeddelivered the ‘iwad equivalence. This shall be in the form of:
its ability to make the goods available in the market
absorbing market risks and risk of ownership (
).In the former, we are looking at the valued-addition(
) factor, whilelatter describes the ghorm or risk-taking aspects of sale.However in the BBA sale, it seems that the $100,000 profit is created onthe basis of time factor alone. To some extent, we failed to understandhow a profit rate of 10% can be determined ex ente when concurrently Islamic banks cannot declare ex ente the rates of return on deposits.