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0 | Purchasing an asset with deferred price, either on the basis of musawamah or murabaaah, then selling it to a third party so as to obtain cash. (BNM, 2010:224) |
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| 2 |
1 | At the first stage, the customer approaches the institution for cash financing. The institution then assesses customer's ability of engaging in such contract. However, this stage is practically critical, because most ar-rahn institutions are not assessing customer's credit ability in repaying the debt. The absence of customer's credit assessment is a great turning point for the success of this suggested structure. Thus, the exemption or very minimal assessment, which takes very short time is a must condition |
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2 | The institution buys a commodity from Broker A upon client's request; normally, this process of buying a commodity is done through Suq al-Sila or Commodity Murabahah House. This trading platform that uses crude palm oil as the underlying commodity is introduced by Bursa Malaysia in 2009 so as to facilitate Islamic financia1 transactions, particularly the application of commodity murabahah which is based on the principle of tawarruq.Usually, this process will include buying and selling transactions in ten minutes, since it is applied through the system in computer |
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3 | The institution sells the commodity to the customer at a mark-up price, and the customer pays the price in deferred payment basis, based on six months or above according to the agreed terms and conditions of the contract. |
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4 | The customer's jewelry is pawned to the bank based on rahn contract in lieu of a debt, which he/she pays in the deferred time. |
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5 | The customer appoints the institution as his/her agent to sell the commodity to a third party for getting the cash. This process is also conducted through mechanism of Suq al-Sila, or Commodity Murabahah House. Once again, at this stage the institution must find a way for the exemption of wakalah fee that is resulted from the appointment of bank as the customer's agent. This fee may discourage the customers as the institution is already making a profit from the mark-up price |
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6 | As an agent, the institution sells the commodity to the third party, who is known as broker B. But this time, the selling price is based on the current market price that makes the difference of what customer should pay to the institution. |
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7 | The difference that creates the cash will then be given straight away to the customers, or credited into customer's account depending on how the institution wills to disburse it |
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