REVERSAL OF DEBT IN MURĀBAḤAH FINANCING RESTRUCTURING IN TANZANIA: A WAY FORWARD

Abstract

In Tanzania, murābaḥah is one of the contracts which is used to be offered by the banks offering Islamic banking business on various consumer use and trade financing products. One of the matters which arises in the practice of murābaḥah is restructuring of the financing. Therefore, this paper deliberates and analyses the aspect of restructuring in murābaḥah financing in banking practices in Tanzania. In doing so, this discussion focuses on the Sharīʿah discourse on the concept of qalb al-dayn (reversal of debt). The aim of the study is to reveal the issues which are associated with murābaḥah financing restructuring in Tanzania and to propose the ways forward. The findings of this paper reveal that there is a regulatory issue which has impact on Sharīʿah compliance. This is the regulatory requirement to banking institutions to charge extra amount in respect of restructuring arrangement which results to ribā. The methodology adopted in this study is based on qualitative and descriptive approaches. It encompasses documentary review which involves authoritative and non-authoritative legal and Sharīʿah sources. The study recommends introduction of regulations for murābaḥah financing. Also, financial institutions are advised to adopt acceptable forms of qalb al-dayn when they are restructuring the financing.