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Identify Issues
Make Things Better
RM 130,000
Initial Capital Contribution
See spreadsheet
sheet 1
Penalty Clause
3.5% of the
original financing
Margin of profit:
BFR-1.6% per
Current BFR6.3%
RM 5000,
whichever is
Suggestion of Rent
Balance sheet of Maybank Islamic Berhad (March, 2010)
• Time Of Contracting
- Bank's Share Is Recognized Under The Title 'Musyarakah Mutanaqisah
Musyarakah Mutanaqisah
• Repayment Of Capital By Customer
- Bank's Share Declines As The Customer's Share Increaes Per Each
Musyarakah Mutanaqisah
• Rental payment
- Periodic rental amonuts will be jointly shared between the bank and
the customer accoding to the percentage share holding at the particular
times which Keeps changing as the customer purchases the bank's
Profit And Loss
 Disclosure on Capital Adequacy
 "The very objective of the Shariah (Maqasid Shariah) is to
promote the welfare of the people which lies in safeguarding
their faith, their life, their intellect, their posterity and their
property. Whatever ensures the safeguard of these five serves
public interest and is desirable." Imam Al Ghazali
 “One purpose of the Shariah is the preservation and
protection of the basic necessities (daruriyat) of man without
which life would probably be filled with anarchy and chaos
and thus become meaningless. Professor Rosly.
 Shariah aims at protecting and preserving public interests
(maslahah) in all aspects and segments of life.
Legality of MM
The bank
The customer
In Islam the concept of right is defined as haqq. Primarily, Al-Haqq
is one of the names of Allah (SWT) meaning “The Truth” and is
mentioned more than 200 times in the Holy Qur’an.
That is because Allah—
He is the Truth , and
what you call upon
besides Him is
falsehood. Allah is the
All-High, the Most Great.
(Surah Luqman, 31:30)
O you who believe! When you deal with each other, in
transactions involving future obligations in a fixed period
of time, write it down. Let a scribe write it down in
justice between you……Let him (the debtor) who incurs
the liability dictate, and he must fear Allah, his Lord,
and diminish not anything of what he owes……..And
get two witnesses out of your own men. You should not
become weary to write it (your contract), whether it be
small or big, for its fixed term, that is more just with
Allah; more solid as evidence, and more convenient to
prevent doubts among yourselves….
But take witnesses whenever you make a commercial
contract. Let neither scribe nor witness suffer any harm, but
if you do (such harm), it would be wickedness in you. So be
afraid of Allah; and Allah teaches you. And Allah is the AllKnower of each and everything. (Al-Baqarah, 282)
In Shariah haqq is “the exclusive power over
something or demand addressed to another
party which the Shariah has validated in
order to realise a certain benefit”. Based on
this commercial right is confined to rights
having monetary value (qima maliyya).
Rights over Property
The Bank’s rights
• The right of entry or re-entry
for the purpose of inspection
of the property;
• The right to cure any defects
of the property (but shall not
at any time impose any
obligation upon the Bank to
rectify such defects);
• The right to approve any
significant improvements to
the Property (but such right
shall not impose any
obligation upon the Bank to
pay for such improvements)
The Customer’s rights
• The sole and exclusive right to
occupy the Property;
• The right to purchase the
ownership shares of the Bank
in the Property at any time
subject to the terms of this
Default Event
In theory
• In the event of customer default,
the contract will be cancelled.
• Without wa’d (promise to
purchase) the property will be
sold and theprofit will be
divided according to the
ownership shares of the bank
and the customer.
• With wa’d, the customer has to
to acquire the bank’s remaining
share of the property. This
creates a debt to be paid by the
customer to the bank.
In the case
• The Bank may terminate the
contract if the Customer:
• Defaults or fails to pay any
monthly payments of the
home/Shop house Equity-i, the
monthly rental or any other
sums of money payable on its
due date to the Bank
• There is no wa’d in the
Damages to the Property
The Bank requires the Property to be protected by Home
Building/Fire Takaful certificate:
All certificates will be taken up at the
Customer’s costs and expenses
Property valuation and Rental reconsideration
In the case
• The Bank may time to time
require the Property to be
valued or revalue by the
Bank’s appointed valuers at
the cost of the Customer
• The monthly payment and
acquisition payment may vary
at any time at the Bank’s
In theory
• A property should be valued
only when there is a sale of
the property which would
involve the full transfer of
ownership. Meera & Razak
• The monthly rental could be
reviewed at any time
throughout the duration of the
contract subject to consent of
both parties. The customer
may not be able to afford a
new rental payment.
Bibliography and references
 Rosly, Saiful Azhar (2010) “Shariah Parameters Reconsidered”,
International Journal of Islamic and Middle Eastern Finance
and Management, Vol. 3, No 2, 2010, pp.132-146
 Meera, Ahamed Kameel Mydin, & Abdul Razak, Dzuljastri (2009)
“Home Financing through the Musharakah Mutanaqisah
Contracts: Some Practical Issues”, Journal of King Abdul Aziz
University: Islamic Economics, Vol. 22 No. 1, 2009, pp. 3-27.
 Osmani, Noor Mohammad & Abdullah, Md. Faruk (2010)
“Musharakah Mutanaqisah Home Financing: A Review of
Literatures and Practices of Islamic Banks In Malaysia”
International Review of Business Research Papers, Vol. 6, No.
2, 2010 pp. 272 - 282