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Bai ( Buying & Selling ) by Zubair Mughal

Bai ( Buying & Selling ) by Zubair Mughal

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Published by: alhudacibe on Dec 20, 2010
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05/12/2014

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Islamic Banking

Presented by : Zubair Mughal
CEO AlHuda: Centre of Islamic Banking & Economics

Musharakah 

Characteristics 
   

All parties share in the capital All parties share profits as well as losses Profits are distributed as per agreed ratio Loss is borne by the parties as per capital ratio Every partner is agent of other

MUSHARAKAH
PROFIT Rs. 100 Rs. 60 Rs. 40 May be in any agreed ratio

Rs.1000

Rs.1000

PARTNER A

VENTURE

PARTNER B

Rs. 50 LOSS Rs.100

Rs. 50

Must be according to capital ratio

Mudarabah  

 

One partner (Rab al Mal) contributes capital and the other (Mudarib) contributes his skills or services to the venture Venture may for a fixed period or purpose Both share profit in pre-agreed ratio Loss is borne by Rab al Mal only, Mudarib loses his services

MUDARABAH
PROFIT 60 % 40 %

CAPITAL

SERVICES

RABBUL MAL

VENTURE

MUDARIB

ALL MONETORY LOSS LOSS

LOSS OF SERVICES

Basic Rules of Bai 

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

Basic Rules of Bai 

Existence of Product/Commodity Ownership of Product/Commodity Possession of Product/Commodity  

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 Bai Bai Bai Bai Bai

Musawamah Murabaha Surf Salam Istisna 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

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 Bai Bai Bai

Salah Fasid Batil Maqoof

Type of Bai according to Quality 

 

Bai Majool Bai Muqayaddah Bai Mu ajal

Thank you

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