Islamic personal financing instruments in the Malaysian banking industries: issues and alternatives

The application of Islamic personal financing instruments in the Malaysian banking industries such as bayc alc ?nah (same-item sale-repurchase) and organised tawarruq (commodity cost-plus sale) has suffered a worldwide ban by prominent fatwa bodies in Islamic world. The situation has led to negative consequences such as bad perceptions to the Malaysian banking industries. The aim of this article is to provide an overview related to the Islamic personal financing instruments. Analysis focuses on issues related to the unlawfulness of the instruments. This qualitative research employs content analysis approach. It reveals that Islamic personal financing instruments such as bayc alc ?nah and organised tawarruq that have been practised in Malaysia contain unlawful elements that violate Islamic law and its objectives. Islamic banking and finance needs alternative instruments to replace the current unlawful financing tools to maintain Sharia compliant sta