1.

INTRODUCTION

Islamic banking (Arabic: ) is banking or banking activity

that is consistent with the principles of shariah (Islamic law) and its practical
application through the development of Islamic economics. As such, a more
correct term for Islamic banking is shari'ah compliant finance.
Shariah prohibits acceptance of specific interest or fees for loans of
money (known as riba, or usury), whether the payment is fixed or floating.
Investment in businesses that provide goods or services considered contrary
to Islamic principles (e.g. pork or alcohol) is also illegal (sinful and
prohibited").

Although these prohibitions have been applied historically in

varying degrees in Muslim countries/communities to prevent un-Islamic

practices, only in the late 20th century were a number of Islamic banks
formed

to

apply

these

principles

to private or

semi-

private commercial institutions within the Muslim community.

CIMB Islamic is the global Islamic banking and finance services
franchises of CIMB Group. There offer innovative and comprehensive
Shariah-compliant financial solutions in investment banking, consumer
banking, asset management, private banking and wealth management.
Their headquarter in Kuala Lumpur, Malaysia and offer consumer
banking wholesale banking, asset management products and services which
comply with Shariah principles, There are a part of the fifth largest banking
group in ASEAN, with over 40,000 staff in 17 countries across ASEAN, Asian
and beyond.
There are also enable provide a wide range of products and services to
commercial, corporate, and institutional customers across ASEAN, the Middle
East, South Asia, North Asia and compliance with shariah principle under

the guidance of the CIMB Islamic Shariah Committee, which comprises the
worlds leading Islamic scholars.

2.0

OVERVIEW OF PRODUCT

This product is a personal finance without collateral and the rate of

profit is calculated on the average. Bai Inah is used, which means a contract
involving the sale and purchase of property transactions, where the seller
sells the asset to the buyer in installments and will buy back the asset for
cash. With this product, you will earn effective profit rate of 36.82% in a year.
All you need is to pay (responsibility) on monthly installments and the full
amount yearly will come out. Charges payable is a stamp duty and Takaful
contributions. Takaful protection highly recommended because you can get
an Xpress Cash Protector-i Plan sponsored by Sun Life Malaysia Takaful
Berhad or get your own Takaful protection from other Takaful companies
which may accepted by the bank. Takaful contributions payable shall be
deducted from the facility.
What if fails to meet its obligations?

Within the facility prior to maturity: compensation (Tawidh) will be

charged at the rate of 1% per amount of the amount of arrears.

After a period of maturity: the compensation will be charged at the
Islamic Interbank Money Market Rate which applicable on the balance

of the sales bank price.

CIMB Islamic may decline any credit balances in accounts held by them

against any outstanding balance in this financing account.

Legal action against you may affect your credit rating and lead to
difficulty obtaining financing or funding provided at a higher rate.
2

If fully explain the financing before its maturity, the rebate (Ibra) will
be given to you at the bank selling price if you make a full financing solution
before its maturity.

2.1

Calculations Of Rebate (Ibra)

Ibra calculations

The amount payable after Ibra

calculations

Rebate (Ibra) = [n (n+1) / N The amount payable: The remainder

(N+1)] x PM

of the selling price + Tawidh +

n = The remaining months to Other costs Ibra

maturity
N = The amount of the loan period
(month)
PM = Total profit margin

Guarantor is required for loans exceeding RM 5,000 and no other collateral is

required.

3.0

CONTRACT USING AND PRACTICE IN ISLAMIC FINANCIAL

The financial system and the economy are mostly monopolized by

conventional financial institutions. As we all know, the conventional concept
should not be run from the laptop. However, today the Islamic financial
institutions have taken steps to further introduce more financial products
based on Islam is able to compete with conventional financial institutions.
Among the important concept that is applied in the products of Islamic
financial institutions is BayAl-Inah. BayAl-Inah widely used in the Islamic
banking sector. This concept is usually applied in product financing
(financing). Xpress Cash Financing-I product from CIMB ISLAMIC BANK
BERHAD used BayAl-Inah as the personal financing and also for the Credit
card, working capital financing and BBA financing.
The Shariah concept applied is BayAl-Inah which means a BayAl-Inah
is one of the contracts of sales in Islamic banking system. Previously, BayAlInah is used in Islamic banking product such as personal financing and credit
card. But most of Muslim scholars decided that this contract involved hillah
to Riba. To solve this problem they come out with tawaruq contract.
Definition of Bay Al-Inah in literally, Inah is a loan or an advance payment.
It is said in Arabic: Itana ar-rajul (the man bought on credit). This is usually
said when he barters one for another on credit or when he buys on credit.
This type of sale named Inah (a credit sale) because the buyer of commodity
for a fixed time will take its compensation (from the seller) in cash on the
spot. Technically, scholars gave different definitions to Inah due to their
differing opinions regarding its form. However, the most famous definition
given to it by classical scholars was: a situation whereby a person sells his
commodity to another for a specific price with payment delayed until a fixed
date, and then he buys it back from the other person at a lower price in
cash.
For example, where someone in need of cash comes to someone else
to apply for a loan. The creditors refused to lend unless he would have
benefited from the loan and at the same time he realizes that advantage will
4

lead to the occurrence of usury which clearly forbidden by Islam. The

creditors taken the initiative to sell an asset to the debtor and creditors with
deferred purchase goods for cash at a price lower. The concept is called
BayAl-Inah. Explanation for the example is normally this method is used in
personal financing products. Conceptually, it has two contract / agreement.
First, the purchase contract between the bank and the customer. The bank
will sell an asset to customers with deferred (installment). Second, the
contract to repurchase the asset sold to the customer. That bank to buy back
the asset at a price in cash.
In this context, seems to act as a creditor bank and get interest based
on the price of credit and the cash price of the transaction. But it the trick to
move from contract to contract loans for the purchase of goods is allowed by
Islam and can avoid the usury.
To coordinate the use of Bay'Al-Inah in Islamic financial industry, the
Shariah Advisory Council of Bank Negara Malaysia has set the conditions of
BayAl- Inah, the first is purchase contract has two distinct and separate,
namely the contract of purchase and sale contract. The second is there is no
requirement to repurchase the asset in the contract. The third is time takes
place every contract is different. The next is follow the correct contract. That
is the first sale contract shall be executed prior to the purchase of the second
run. And the last, transfer of ownership of existing assets and control of
assets (qabd) valid under Islamic law and current business practices (custom
tijari).

3.1

The Application Or Practice In The Islamic Financial

Bayal- Inah is normally applied in cash line facility-i, credit card,

and personal financing whereby the purpose of the financing is

normally for cash and liquidity. The application of Bay al-Inah in Islamic
finance can be looked from the following modus operandi.

Figure 1: The application of inah in the banking system.

1. The bank sells a particular asset to the customer on a deferred
payment basis at the real cost plus the profit that is equivalent to
the maximum amount to be paid by the customer which is RM70
000.
2. The customer then resells the same asset to the bank on cash basis
with a lower price than before which is RM50 000.
3. The customer pays the bank the amount he utilized by installment
or cash basis at once.
The example of the practices in the BayAl-Inah is as follows:
N

Islamic

Institution

Financial Personal
Name
6

Financing/

Product

Bank

Kerjasama

Rakyat

Malaysia
2

Personal Financing-i Aslah

Personal Financing-i for Progres-i,

OCBC Al-Amin (M) Berhad

Sukses-I,

Prestij-i

and

Corporate

Cash-i
Public Islamic Bank Berhad BAE Personal Financing-i

AmIslamic Bank Berhad

Personal Financing-i

Bank Simpanan Nasional

BSN AFLAH SPIK Personal Financing-i

Agrobank
Alliance
Islamic

AgroCash-i
Bank Alliance Cash

Berhad
8
CIMB Islamic Bank Berhad

Affin Islamic Bank Berhad

10
Maybank Islamic Berhad

Vantage

Personal

Financing-i
1 Xpress Cash Financing-i
2 Cash Plus Financing-i
3

Pembiayaan

Awam-i
Affin
Islamic

Peribadi
Personal

Sektor
Term

Financing-i
Maybank Islamic Personal Financingi

Most of the financial institution they used BayAl-Inah as the personal

financing and also for the credit card, working capital financing and BBA
financing.

4.0

LEGALITY OF BAYAL-INAH

The legality of inah is closely related to the legality of stratagems

(hiyal) and the legality of means that may lead to harmful or corrupt
objective (dharai). Muslim jurists hold different opinions concerning the issue
of the formation and substance of a contract. Accordingly, Abu Hanifa, AlShafii and Ibn Hazm, for instance, are of the view that the validity of a
transaction is determined by its expression or the form of the contract. The
intention of the contracting parties or one of them are not to be considered
unless it is expressed or declared.
Therefore, they draw a clear demarcation between the manifestation of
corrupted intent (mala fide) in the contact and the absence of clear
indicators of such intent. When the intent to engage in the unlawful or
inflicted harm is apparent, such as the intent to partake in usury, then alShafii and Ibn Hazm, like other scholars, do not permit it.
4.1
i.

Bay al-Inah Is Permissible:

According to the hadith below, reported by Abu Hurayrah. The

Messenger said:
Sell the al- Jam`u (lower grade of) dates for silver dirhams and
then buy with the silver dirhams the al-Janib dates.
According to Ibn Hajar & al-San`ani: the hadith indicates the
permissibility of Bay` al-Inah. The Prophet s.a.w never specified:
the sale should be with the third or the first party with the help
of the silver dirham and the hadith is a general hadith involving
the third and the first party.
Abu Hurayrah reported that Rasulullah had hired a man in the
Khaibar battle. The man then came and gave Rasulullah the
dates of al-Janib (high quality dates) and the Rasulullah asked:
Do all the dates of Khaibar as good as this? The man replied: O

the Messenger of Allah, by Allah, no, we usually would take a

measure of this type of date to be exchanged with two measures
of another (lower) types of dates, and exchanged two measures
with three measures. The Messenger of Allah said: Dont do that,
sell the al-Jam`u (lower grade of) dates for silver dirhams and
ii.

then buy with the silver dirhams the al-Janib dates

There are many misleading views regarding the position of Imam
Al-Shafi representing the Shafi school pertaining to Bay al-Inah.
This view stem from the presumption that imam al-Shafii
validates and out rightly endorses Bay al-Inah. The following
provides some evidences from the classical Islamic Jurisprudence
texts that refute this view:
In another vein, if a man buys a commodity from another
person, and the payment is deferred to a stipulated time, there
is nothing wrong if he sells it back to the person he bought it
from or to another person for cash at a price lower or higher than
the price at which he bought it, or for a debt or barter of a
commodity at a value he chooses to assign to it. The reason here
is that the second transaction is not linked to the first
transaction.
(Al-Shafii, Al-Umm, Volume 3,
page 90)
This statement of Al-Syafii signifies that he does prohibit Inah
ethically if the party in contract is not able to justify his action
and intention before Allah (s.a.w). This is to say does not prohibit
it on the basis of mere presumption of peoples intention in
entering into the sales contract. However, if the mal-intention of
the person dealing in Inah is explicit or apparent through his
expression that the commodity is to be resold to the first seller,
then he would inevitably prohibit it.

The Zahiri school agreed with Al-SyafiI, as stated by Ibn Hazm

that: Whoever sells a commodity for a stipulated price to be
paid immediately or for a deferred payment for a short or long
term, he has right to sell that commodity to the one he bought it
from at the same price he paid for it, or less or more. Payment
can be made instantly, and it may be deferred to a time shorter
or longer than the time of the first transaction or for the same
time. All these is such a condition, then it is forbidden and must
be nullified without any hesitation, and it should be classified as
a kind of coercion as maintained by Al-ShafiI. (Ibn Hazm, AlMahalla bi Al-Athar, Volume 7 page 549)

4.2
i.

Bay al-Inah Is Prohibited:

Reported by Ibn Umar. Rasulullah forbade contract of al-Inah. The

hadith indicates al-Inah contract is a prime source of humiliation,
disgrace and disaster. Unless you repent and get rid of al-Inah.
Ibn Umar reported that Rasulullah had said:
If you sell to one another with al-Inah, and follow (from behind)
the bulls tail and are satisfied with farming and abandoned aljihad, Allah will force you into a state of humiliation and He will

ii.

not remove it until you return back to your religion.

Narrated by Abu Ishaq, from his wife Aliyah binti Anfa`: It was
reported that Saydatina Aishah was asked by a mother (a slave
belongs to Zaid bin Arqam) about a particular transaction dealt
by her. She said: O Ummu al-Muminin! I have sold a slave of
Zaid bin Arqam to `Ata at 800 dirham in credit (on behalf of her
master). Because of `Ata (the buyer) needed some amount of
money (cash), I have purchased the slave back at 600 dirham in
cash. Saydatina Aishah responded: How could you fulfill such a
10

bad sale. You should inform Zaid bin Arqam that the said
transaction

has

removed

all

his

rewards

throughout

his

participation in jihad with the Prophet (peace be upon him), if he

does not repent. According to the majority of jurists, Aishah
assertion clearly indicated that Inah was unlawful contract.
The shariah Advisory Council of Bank Negara Malaysia (BNM) in its
meeting held on 12 December 1998 agreed that the objection to bay al-inah
are adopted by the majority of shariah scholar, but ruled that buy al-inah is
acceptable subject to the following two condition which are:
i.
ii.

The mechanism practiced is acceptable to the Shafii scholar; and,

The transacted item is not a ribawi item (goods that are not in
consonance with fiqh rules with respect to cash or item sold by weight
and /or measure).
As for the Maliki and Hambali schools of low, they refute hiyal and

dharai and uphold the view that matters are to be determined by the
intention of the contractors, and therefore any means through permissible,
but which are employed in order to achieve a harmful or corrupt motive
should be interdicted, such as when a person engages in business with the
intention to disguisedly carry out an interest-related transaction because
permitting them negates the objectives of the Shari'ah.

5.0

ISSUES PERTAINING TO BAY AL-INAH

Bay al-inah is not found in any classical Islamic commercial law.

However the Bayal-inah are permitted by school Shafii because Shafii said
that the intention of niyyah is not condition to be determining the validity
contract of Bay al- Inah.

11

Bay al-inah has two contracts which is sale contract and repurchase
contract. The issues raised by the following :
i.

Existing two sales in one sale.

The hadith have stated that prohibit the carrying out of two
sale contracts in one sale contract, as well as that of relating a sale
with conditions contravening the requirement of that sale. Al-Shafii
is the only school of Islamic law (mazhab) that legalizes bayal-inah,
while other schools of Islamic law consider bay al-Inah as a kind of
invalid transaction that leads to the usury (riba).

ii.

No actual selling and buying transactions (bay) and the assets are
never leave the bank also one of the issues pertaining to Bayalinah.
This means that the contract Bayal- inah selling and buying
are only an excuse to give out loan with interest. Its just as hillah to
used the Islamic commercial Law in obtaining cash without involve
any element in Riba.

6.0

CONCLUSION

Benefit of this loan offers a 24 hours approval status with quick cash disbursement. This
would suit someone who are in need of cash quickly. CIMB Personal loan is one of the most
popular personal loan in Malaysia. At the moment CIMB offers may type of personal loan
ranging from Shariah compliant loan, public sector loan to secured loan. Here are some of the
loans from CIMB Bank and CIMB Islamic bank.

12

CIMB Pembiayaan Peribadi Sektor Awam-i is personal financing that is catered for
Malaysian public sector employees only. You can enjoy from 5.55% to 5.25% (p.a.) flat interest
rates. The effective interest rates for 5.55% (flat) would be 9.92% while 5.25% (flat) would be
9.43%. To enjoy the 5.25% p.a, you will need to have a salary of RM 3,000 and above. While
you will get 5.55% p.a if you are earning RM3,000 and less. There are no collateral and
guarantor needed for the loan application.
The maximum you can finance would be RM 200,000 with 10 years repayment period.
However this will also depends very much on amount deducted from your salary. The standard
figure is 60% of the auto salary deduction. As of all government loans, payments for this loan is
done automatically via Biro Angkasa. This loan comes with Takaful coverage.

7.0

REFERENCES

1. Islamic Financial System, Principal & Operations, (2012), International

Shari'ah Research Academy for Islamic Finance (ISRA), Kuala Lumpur,
Malaysia.
2. https://www.cimbislamic.com/
3. http://mahir-al-hujjah.blogspot.my/2009/12/bay-al-inah-danaplikasinya-di-malaysia.html
4. http://documents.mx/documents/bai-inah-project.html
5. http://www.personalloan.com.my/cimb-xpress-loan/40/
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8.0

APPENDIX

14

15