1. What is your advice to consumers who are planning to take up BBA?

In the context of Malaysian consumer perspective, they do not have much choice
about the availability of financing facilities particularly retail products. Furthermore,
the consumers are motivated with price and package of financing that suit their
needs and financial capabilities. Hence there must be a paradigm shift on the
consumer’s way of thinking and approach towards Islamic financial products
including BBA. While believing that education and awareness about general
understanding of Islamic financial products on the part of consumer are of the
essence, I am of the view that the consumers must also be very diligent and concern
about the mechanism of Islamic financial products that they plan to subscribe. With
the basic knowledge of contemporary applied Islamic finance, then the consumer
may be able to influence the market particularly financial institutions to satisfy their
needs towards Shari’ah-based financing.

2) Issue gharar or uncertainty

In BBA the issue gharar or uncertainty could arises involving
property which is still under construction and not for the property to be purchased is
already in existence. The issue gharar arises because the
property to which the facility is covering is to be constructed or yet to exist, the
validity of BBA facility is questionable as the property is not completed yet because
one of the pillar under a valid contract of sale under the
Shari’ah, with the exception of bai’ salam and bai’ istisna, the
subject matter must be in existence.

3) Late Payment
Islamic Banks face severe criticism when it comes to the discussion of late payment
penalty or charges. Usually Islamic Banks are allowed to impose Ta’wid as a
punishment to late penalty where they take it and put it into charity fund. However
Banks are also allowed to consider this late penalty as an Income by BNM. Due to
this, the late payment treatment is same like conventional banks.

4) What if I fail to fulfill my obligations (automobile financing-I)?

 Right to set-off: We may have the right to set-off any credit balance in your
Current/Saving CASA
account maintained with us against any outstanding balance.

 Right to take possession of the vehicle by virtue of Deed of Assignment of the

vehicle to the bank.

 Legal action will be taken against you for recovery of non-payment of
outstanding amount. The Bank
may proceed with bankruptcy or any appropriate legal action against you to recover
the outstanding
amount. All legal costs related to the recovery action shall be borne by you.

 Legal action against you may affect your credit rating leading to credit being
more difficult or expensive
to you.

INTRODUCTION BBA:

BNM DEFINES:
BBA as deferred payment sale whereby the property requested by the client is
bought by the financier, who subsequently sells the goods to the client at an agreed
price, including a mark-up (profit) for the Islamic bank. The selling price is fixed and
agreed by both parties and will remain unchanged until the end of the payment
period. The ownership of the property purchased will be under the claim of the
financier and will be handed over to the customer upon full payment.

What Is Islamic Banking?

Islamic banking, also known as non-interest banking, is a banking system that is
based on the principles of Islamic or Sharia law and guided by Islamic economics.
Two fundamental principles of Islamic banking are the sharing of profit and loss, and
the prohibition of the collection and payment of interest by lenders and investors.
Islamic law prohibits collecting interest or "riba."