Centre for Shariah Reference in Islamic Finance - Pusat Rujukan Shariah Bagi Kewangan Islam

Centre For Shariah Reference in Islamic FinancePusat Rujukan Shariah Bagi Kewangan Islam
Transfer of Assets & Performance Guarantees in Istiṣnā’ Contract

Transfer of Assets & Performance Guarantees in Istiṣnā’ Contract

] Istiṣnā’ refers to the contract of sale of assets that have not been constructed, developed or manufactured according to specifications agreed upon by the seller and the buyer. It is usually applied in financing products involving assets that do not yet exist. Istiṣnā’ has not been widely applied in the Islamic finance industry. The reason is that there are obscurity in some of the issues of istiṣnā’s such as property rights issue istiṣnā’ (maṣnū’) in construction as well as customer guarantee issues on contractor’s performance in the istiṣnā’ parallel arrangement (istiṣnā’ muwāzī). In this regard, this paper discusses past debate debates and contemporary scholars on these issues. Shariah-clarity on these raised issues is seen as opening up more space for Islamic financial institutions (IKI) to explore and develop istiṣnā’s based products. This can indirectly encourage the industry’s interest in expanding the application of istiṣnā’s based on the Islamic finance industry

By: Nur Muhammad Sesth Jemahat, Ahmad bin Khairuddin

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Attachment: Working Paper