Application In Islamic Banking Research Articles

Reconstruction of the Mudharabah Financing Agreement at Bank Syariah Indonesia

This research was motivated by the lack of maximum mudharabah financing due to the high risk experienced by Islamic banking. In addition, Islamic banks are extra careful in channeling mudharabah financing. This study aims to find out what the results of the reconstruction of mudharabah financing look like. Relating to rebuilding the mudharabah contract, the aims and practices align with what is determined in accordance with the basic principles of Islamic banking. Researchers use qualitative phenomenological approaches that are descriptive, analytical and inductive. This research seeks to explore data to find the basics of phenomena, reality and experience. This research uses documentary studies and studies of theories to explain and conclude the problems raised. This research is descriptive, which means it describes or describes a situation, symptoms, and events. In this case, to find out problems related to the status of Islamic banking as shahibul mal in the mudharabah contract that occurred at Bank Syariah Indonesia (BSI) Regional South Sulawesi. From various related information, from references that discuss mudharabah transactions and their application in Islamic banking that occur at Bank Syariah Indonesia (BSI) South Sulawesi Regional. This study concluded that the reconstruction carried out at BSI still did not go as expected. There are still many obstacles faced, including in determining profits. Meanwhile, the mudharabah contract applied at BSI is free from maysir, gharar, and usury elements—Mudharabah financing practices. The profit-sharing ratio given to mudharabah financing benefits both banks and customers. Profit sharing system where operational costs must reduce the profit earned by the fund manager and must also return the funds provided by shahibul maal therefore the profit obtained by the mudharib is by what is agreed. Various customers have felt this financing because customers who previously did not have the capital to do business with this financing customers can have capital provided by the BSI Regional South Sulawesi Bank. In practice, the distribution of profits between the two parties is based on a pre-agreed ratio. The ratio is the share of business profits for each party whose amount is determined based on the agreement. The partnership relationship in mudharabah financing is a collaboration between shahibul maal to provide funds. In contrast, the other party, mudharib, provides his mind, energy, and time to manage the cooperation business. The most important element in mudharabah financing cooperation is trust. This belief is mainly from shahibul maal to mudharib. Shahibulmaal should act as a supervisor to the mudharib to avoid business risks. The author advises BSI always to supervise customers when managing funds provided by banks in order to create transparency between the bank and customers. The bank should analyze the character and ability of prospective customers first before providing financing to customers to run a business and manage the funds provided by the bank, in order to minimize losses obtained by shahibul mall and can establish transparent cooperation and in accordance with Islamic economic principles

The Principles and Practices of Akad Ijarah: A Research Application in Islamic Banking

This article investigates the principles and practices of Akad Ijarah and its application in Islamic banking. Using a literature review method, this article explores the fundamental concept of Akad Ijarah and analyzes its implementation in the context of Islamic banking. The research aims to provide a deep understanding of the structure, mechanisms, and benefits of Akad Ijarah for Islamic financial institutions. The analysis results present a comprehensive overview of how Akad Ijarah is implemented in the practices of Islamic banking, as well as the challenges and opportunities it faces. These findings have significant implications for the development of Islamic banking products and services that adhere to Shariah principles. In conclusion, this research highlights the importance of a solid understanding of Akad Ijarah in ensuring the compliance of Islamic banking with Shariah principles.

Implementation of Wadi'ah Academic In Sharia Banking

Public interest in muamalah according to shari'ah is a growing factor in the Indonesian economy. To develop society, the principle of Islamic Banking Institutions or Syari'ah Banking is to dismantle the interest system and replace it with a system for measuring the results of savings and loan operations. The most common form of fundraising contract in Islamic banks is the savings contract, which is also known as the wadi'ah contract. This study uses a constructive paradigm with a qualitative descriptive analysis for this type of research conducted on the literature. To process data, users use two types: secondary data and primary data. Data collection techniques are carried out using documentation studies. Data analysis uses content analysis with a more thorough process which includes categorization and selection in an in-depth format. In the process of collecting and analyzing data, researchers used two models of triangulation of sources. According to evidence, Wadi'ah helps those in need. Based on its application in Islamic banking, the term "wadi'ah contract" is divided into two categories, namely "Safe Keeping" and "Safe Deposit Box". "Safe Keeping" refers to the safekeeping of documents, contracts and other important documents, while "Safe Deposit Box" refers to the safekeeping of important papers, contracts and other documents. Every sharia banking organization must carry out its banking activities in accordance with Islamic sharia principles, especially those related to credit procedures. Islamic banking not only has a destination, but also has various problems. Including sharia products and tabling based on wadi'ah contracts.

The Salam transaction in the Islamic tradition and its application in Islamic banking

This article reveals some features of the “Salam” contract which refers to the purchase of a commodity for deferred delivery in exchange for immediate payment. The structure of the Salam Contract changes the logic of ordinary sales contracts, hereby article focuses on differentiation between pre-paid Salam Contract on the one hand and the sales of goods contract (bay’) and the concept of advanced payment on the other hand. Part 2 of the article highlights the Salam Contract as a type of pre-delivery finance instrument based on the Islamic banking theory and practice. As a banking instrument, the salam agreement is primarily aimed at implementing pre-delivery financing of the real sector of the economy, which makes it possible to adjust, plan, replenish and accelerate the turnover of funds of both Islamic banks themselves and their counterparties. Nevertheless, the mechanism of implementing salam in the activities of Islamic banks is primarily aimed at forming contractual relations with reliable and financially stable counterparties. With the help of salam, the Islamic bank acts as a participant in trade in the domestic and foreign markets. Under the Salam agreement, the Islamic bank mainly buys goods whose prices are quoted on international commodity exchanges or on Islamic financial and trading platforms. Along with cooperation with companies operating in the export-import industry, this type of purchase and sale is an effective way of pre-delivery financing of agricultural producers. The article observes also a discussion over Salam Contract application for the market of shares. One point of view on this issue is that the shares have the signs of the individually defined things and thus do not meet the mandatory feature of the salam transaction. Another opinion insists that the shares correspond to all the characteristics of generic items, including the ability to determine their properties and the ability to order (deliver) them. There are also other intermediate points of view.

Urdu-4 Unilateral Promise & its Application in Islamic Banking and Finance

Wa’ad means a promise give the impression of an expression of compliance of a person or a group on a particular matter. There are two types of Promise: a unilateral Promise as well as Bilateral promise. This division denotes the nature of binding and undertaking of the subject matter. It is fact the Wa’ad e Bay (Promise to purchase or sale) plays a vital role in the transactions used by Islamic financial institutions. Murabaha to purchase order, Ijarah Muntahia Bittamleek and Diminishing Musharaka are modes of Islamic financial institutions where unilateral Promise is binding with special reference to the views from the Islamic jurists. AAOIFI Shariah standards had mentioned about unilateral Promise and its application in Islamic which reads as fellow: The promise given by the client in the Murabahah transactions 5/1 The promise given by the client in the Murabahah transactions conducted by institutions is legally binding by virtue of item 3/5 of this Standard. This paper is aimed to discuss the binding nature of Wa’ad (Promise) in Shariah Law from both angles; as Diyanata (moral) as well as Qada’a (legal), with the refrence of the modern Islamic financial system.

Profit and Loss Sharing Application in Islamic Banking

The rapid development of Islamic banking in Indonesia is still faced with the fact that public knowledge about Islamic banking is still low, thus affecting public interest in becoming customers. One of them that must be understood is the procedure for profit and loss sharing in the Islamic banking system. This study aims to determine the application of profit and loss sharing in Islamic banking in Indonesia. This study uses a qualitative approach with a literature review method. The results showed that the agreed profit sharing contract was the proportion of profit sharing (called profit sharing) in terms of the percentage of possible real productivity results with a profit sharing system based on two models, namely the mudharabah and musyarakah models. This study also explains the basic differences between profit and loss sharing (PLS) and the interest system between Islamic banks and conventional banks.

Application of musyarakah in Islamic banking

Purpose - The purpose of this study is to explain syirkah, one of the popular profit-sharing scheme.Method - This research is a descriptive analysis that describes all data and then analyzes the data to obtain a conclusion.Result - This study concludes that the legal basis of syirkah is Al-Qur'an, Sunnah, ijma 'and its application in Islamic banking, namely project financing and venture capital.Implication – Understanding one of the implementation of the profit-sharing system mostly keeps the principle of justice running in the economy.Originality - This study is essential to continue to be studied and explored considering there are still many issues of Islamic law (muamalah) that need to be resolved in sharia law.

Interest-Free Treasury Bonds (IFTB): Islamic Finance and Legal Clarifications

Purpose: Although the treasury bill is the essential monetary instrument in central banking operations, its application in Islamic banking is not legitimate because it involves usury. This implies that the system cannot apply monetary and fiscal policies. To remove this obstacle “Interest-Free Treasury Bond” (IFTB) is introduced as a substitute for conventional treasury bills.
 Design: IFTB is a valuable paper which is issued by government treasury through a barter contract and is sold to central or commercial banks. The issuer is a debtor to the holder, and has to pay back the nominal value at maturity to the holder; in addition, the issuer is committed to lending a similar amount of money to the paper holder for an equal period. The Shariah and legal background of IFTB is explained through new contract types of “time-barter contract” and “time-loan contract”.
 Finding: IFTB is a zero-coupon, asset-backed note with no interest and is designed upon “debt equal to future loan”, or “loan equal to future debt” with “time-withdrawal right”. The paper holder can supply and transact her bond in the secondary market at a competitive price.
 Practical Implication: It can be used as a substitute for conventional treasury bills. All traditional and non-usury systems can implement IFTB.
 JEL: E43, E44, E52, E58, E62, E63

Menyinergikan Aturan Prudensial Dan Aturan Kepatuhan Syariah Pada Perbankan Syariah Di Indonesia

Besidesbeing generally bound by prudential principles in banking regulations, Islamic banking in Indonesia is also bound by sharia principles. In reality, there are several contradictions between these two jurisdictions (conventional banking and Islamic banking). This article aims to discuss why the contradictions between these two jurisdictions can occur. Furthermore, how the possibilities are to make harmony or adjustment among the various different elements, so that these two different jurisdictions can synergistically play a role in driving the development of Islamic banking in Indonesia. The research method in this article is normative legal research with a qualitative analysis model. The conclusion of this article showed that the set of regulations related to the prudential principle of banking in two banking models (conventional and sharia) in fact were the same. It was because this regulation related to banking prudential was originally designed for conventional banking, and, when applied to Islamic banking, various adjustments were needed, for example in the collateral case. This article recommends that sharia-based prudential principles should be immediately integrated into the regulation of banking prudential principles in general to prevent any problems arose from the application of Islamic banking.

Telaah Terhadap Praktik Akad Wadi’ah Di Perbankan Syariah

Even though Islamic banking through its programs has socialized sharia products to the general public, there are still some people who do not understand a number of sharia products, even though when examined about the benefits, all Islamic products certainly have their respective functions and roles in the economic life of the people. In connection with it, the products of the Islamic bank does not escape the problems. In practice, there are findings that might reduce the level of public interest if allowed to continue without the actions of Islamic banks. In addition, even in a sharia perspective, it is necessary to review how the contract should be implemented so that it does not harm both parties, both the bank and the customer. The article intends to examine more deeply about one of the sharia products, namely wadi>’ah (safekeeping services). This product is a deposit fund service where depositors can take the funds at any time, where the bank is not obliged but is allowed to give bonuses to customers. In this paper, the author tries to trace the wadi>’ah contract and its application in Islamic banking and tries to analyze the basis agreed upon by the National Sharia Board (DSN). Based on the literature review and the application of wadi>’ah in Islamic banking, the authors conclude for a while that there is nothing that shows a discrepancy with Islamic principles. However, in practice, it is still very necessary to develop. Keywords: Wadi>’ah, Islamic Bank, National Sharia Board

نظرية المضاربة في الشريعة الاسلامية وتطبيقها في البنوك الاسلامية وتنمية الاقتصاد الإسلامي في إندونيسيا

<p><em>This article aims at explaining the theory of mudharabah in Islamic Sharia and its application in Islamic banking and the development of the Islamic economy in Indonesia. This study is based on field research. The method of analysis of the data used is the analysis of the content on the messages received from mudharabah in Islamic law and its application in Islamic banks and the development of the Islamic economy. The result of this research is that mudharabah is one of the most important and oldest forms of investment of funds in the Islamic Sharia. The fuqaha have agreed on the legality of mudharabah, and the evidence of legality, from the al-Qur’an, Sunnah, Ijma’, and Qiyas. The mudharabah formula in Islamic banks came as a legitimate alternative to traditional financing operations. It is one of the most important forms of Islamic finance and is thought to have been the cause of Islamic banks, which are said to be the Islamic financing formula. In Islamic banks, mudharabah is divided into absolute mudharabah and restricted mudharabah. The economic concept of mudharabah in the economic literature goes to the stock exchange and its predictions of market fluctuations. The investor may have to pay the price differentials in the case of lower prices. </em></p>

Upravljanje kreditnim rizikom u Islamskom bankarstvu

During the centuries of conventional banking practice, a number of credit risk mitigation techniques and instruments have been developed and the process of their evolution, due to constant changes in the banking business, is continuing. Islamic banks, however, have not yet managed to develop authentic, Shariah acceptable credit risk management techniques to the extent sufficient to meet their needs. Therefore, they are often forced to use conventional techniques, whose consistent application in Islamic banking, due to the Shariah non-compliance of certain techniques or the way in which they are implemented in conventional banking, is quite limited. In this paper, we will analyze the conventional credit risk management and mitigation techniques and their applicability in Islamic banking, the credit risk management practices in Islamic banks, the achieved results and factors that influence the emergence and intensity of credit risk in Islamic banking.

Analysis the Gap between BNM Regulation and MM Application in Islamic Banking

Bank Negara Malaysia resolved the utilization of Musharakah Mutanaqisah on the Shariah Advisory Committee 56th meeting in 2010. In the practice, most of the bank use Musharakah Mutanaqisah for the home financing purpose. This study examines the gap between the BNM regulation and both the Maybank Islamic and HSBC Amanah practices. The method of analysis is using qualitative study based on the library research. The result has found the gaps whcih consist of one major gap and three minor gaps, the major gap is related to charging early settlement fee by HSBC Amanah. In addition, three minor gaps are related to wa’d statement in both banks, pledge statement in Maybank side, and default approach compliance in both banks. However, this study does not examine the gap that related to the contract validity. Nevertheless, one single gap found might create the serious issue that leads to effect the contract validity of the product. By uncovering one gap that existed in their practices, this study suggests for better monitoring and supervision conducted by all involved parties. BNM Shariah Advisory Council and Respective Islamic Bank committee should verify the practice that may cause the contract to become void. In addition, the Islamic Financial Institutions should strictly follow all the regulation issued by the Bank Negara Malaysia in all their practices and publication in order to make the contracts acceptable according to Shariah and to cater public confidence. Adhering to guidelines along with the sharia standard of the product further increases accountability and trustworthy of sharia compliancy in particular product.

MURABAHAH (Prinsip dan Mekanismenya Dalam Perbankan Islam)

Abstract: This paper will discuss the mechanism of murabahah agreement and application in Islamic banking, and compare murabahah finance with fixed interest to banks in several key areas. Islamic banks have used murabahah agreements in financing activities through merchandise and expanded their network of uses. Murabahah finance and higher credit prices therein clearly indicate that there is a time value in financing based on murabahah, which leads though not directly to the acceptance of the time value of money.

Tawarruq application in Islamic banking: a review of the literature

Purpose – This paper aims to present the results of a comprehensive literature review with regard to the application of Tawarruq in the Islamic banking system covering the period between 2011 and before. The review aims to synthesize the previous research, capsulize the structural overview inasmuch as future research might be oriented and identify the gaps and direction for future research. Design/methodology/approach – A range of published and unpublished documents was collated and filtered based on the defined rules to identify the determinants of the writing. The documents were then be classified into few segments in which content analysis was conducted to capsulize the essence of the subject matter described in the literature. Findings – The analysis demonstrates that most of the studies discussed the fundamental theories which concerning the area of jurisprudence, while a few of them did discuss the application aspect in the banking environment. However, none of the operational process is discussed in-depth, whereas the risk of Shari’ah non-compliance might arise in the detail transaction. Research limitations/implications – The databases used in the search might not contain all the documents that could be relevant for the review. Furthermore, the defined-rule for document searching and selection excluded the out-of-scope documents that might be relevant. Originality/value – This paper identifies the gaps that become apparent in the literature in assisting researchers to ascertain the interesting areas as well as the direction for future research.

APLIKASI MUDHARABAH DALAM PERBANKAN SYARIAH DI INDONESIA

This theory analysis article aims to describe the meaning of mudharabah, explain about Sharia banks, and provide an overview on implementation of mudharabah in Islamic banking in Indonesia. Mudharabah takes place when there are investor (Shahibul mall), fund manager (mudharib), business activity, and profit sharing proportion (nisbah) agreement between investor and manager. Sharia banking should be performed based on some characteristics, specifically: usury (riba)-free, provides public services and realizes the socio-economic goals of Islam, universal, and applies profit and loss sharing. Moreover, mudharabah application in Islamic banking in Indonesia has the following characteristics: transactions must be intended to financing, business management is entrusted to mudhorib, and profits sharing system must be based on the principle of revenue sharing and proportion of profit sharing are subject to change during the term of the contract as agreed in the initial contract.

Sharia governance in Islamic banks: effectiveness and supervision model

PurposeThe Sharia governance is topic that has generated much interest in the literature of Islamic banking industry. The Sharia supervision plays an essential role in the governance of Islamic banks. The Sharia Board (SB) which is peculiar to Islamic banks is considered as the principal component of the Sharia governance framework. The purpose of this paper is to examines the link between Sharia compliance, the form of Sharia supervision and the effectiveness of Sharia governance.Design/methodology/approachThis paper compares two model of Sharia governance framework, the first is the decentralized model in the Gulf Cooperation Council (GCC) and the second is the centralized model in Malaysia.FindingsThe independence of the SB in their mission of supervision and the consistency of Sharia ruling are the principal components of an efficient Sharia governance structure. Centralized Sharia governance system, basically in Malaysia, seems to be beneficial to the industry in term of effectiveness and credibility of the Islamic banks.Research limitations/implicationsThe research focuses exclusively on the qualitative analysis about the SB and Sharia governance in Islamic countries.Practical implicationsThe model of centralization is able to strengthen the position and the independence of SB and can better examine the subjects of divergences between the whole of the SB in order to promote, in the long term, the consistency of Fatwas and interpretations between banks and regions.Originality/valueTo the best of our knowledge few studies have examined this subject in a comparative discussion between MENA and Southeast Asia region. This paper contributes to the literature on Sharia governance by considering the difference between these two regions in term of supervision model of Sharia rules and principles and its application in Islamic banking.

APLIKASI MUDHARABAH DALAM PERBANKAN SYARIAH DI INDONESIA

This theory analysis article aims to describe the meaning of mudharabah, explain about Sharia banks, and provide an overview on implementation of mudharabah in Islamic banking in Indonesia. Mudharabah takes place when there are investor (Shahibul mall), fund manager (mudharib), business activity, and profit sharing proportion (nisbah) agreement between investor and manager. Sharia banking should be performed based on some characteristics, specifically: usury (riba)-free, provides public services and realizes the socio-economic goals of Islam, universal, and applies profit and loss sharing. Moreover, mudharabah application in Islamic banking in Indonesia has the following characteristics: transactions must be intended to financing, business management is entrusted to mudhorib, and profits sharing system must be based on the principle of revenue sharing and proportion of profit sharing are subject to change during the term of the contract as agreed in the initial contract.

Mechanism of Al-Wa’Ad (Promise): Teory and Application in Islamic Banking in Malaysia

Contract according to Syariah Law can be defined as being “an expression of the matching between a positive proposal made by one of the contractors and the acceptance of the other contractor in a way which has an impact on the subject of the contract” . There are standard requirements provides by the law in order to constitute a valid binding contract namely offer, acceptance, consideration, and intention to create legal relation. This requirement is more or less the same with the Islamic ‘aqad’ however it comes together with the package the prohibition of any element of uncertainty, interest, etc to make sure it complies with the syariah standard. Most of the conventional contract has ignored few aspects of the Islamic contract such as non-spot in the exchange of ribawi item, unjustified increase of premium, and conditional aqad which are totally prohibited. Therefore Islamic Banking in Malaysia has put strong effort to curb these problems and provides a way out by introducing many syariah compliance products and concepts and one of them is al- wa’ad which is the main concern on this article. As a result, by doing this research, it can help people to discover how far the concept of al-wa’ad had been applied in Islamic Banking in Malaysia by comparing its application among few banks including Islamic Bank as well as conventional banks with Islamic Banking window. Key words: Al-Wa’ad (promise); Islamic Banking; Teory and application; Islamic transaction Resume: Contrat selon la syariah peut etre definie comme etant «une expression de l'adequation entre une proposition positive faite par l'un des contractants et l'acceptation de l'autre contractant d'une maniere qui a une incidence sur l'objet du contrat». Il ya des exigences standard fournit par la loi afin de constituer un contrat valable a savoir offre, l'acceptation, la consideration, et l'intention de creer des relations juridiques. Cette exigence est plus ou moins la meme chose avec l'Organisation islamique pour «AQAD 'quoi qu'il arrive avec le paquet de l'interdiction de tout element d'incertitude, interets, etc pour s'assurer qu'elle est conforme a la norme de la charia. La plupart du contrat conventionnel a ignore quelques aspects du contrat islamique comme la non-lieu dans l'echange de point ribawi, l'augmentation injustifiee de la prime, et AQAD conditionnel, qui sont totalement interdites. Par consequent, les banques islamiques en Malaisie a mis effort serieux pour mettre fin a ces problemes et fournit un moyen de sortir par l'introduction de nombreux produits de la charia et le respect des concepts et l'un d'eux est Al-Wa'ad qui est la principale preoccupation de cet article. En consequence, en effectuant cette recherche, il peut aider les gens a decouvrir dans quelle mesure la notion d'al-Wa'ad avait ete appliquee dans les banques islamiques en Malaisie, en comparant son application entre quelques banques dont la Banque islamique ainsi que les banques classiques. Mots-Cles: AL-Wa'ad (promesse); baques islamiques, theorie et applications, transaction islamique

Istisnā` and its Application in Islamic Banking

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