Bay al-Inah
Controversial structure of buy-back arrangement for short-term financing.
Detailed Description
Bay al-Inah
What does Bay al-Inah translate to?
Bay al-Inah translates to 'sale and buy-back'.
What are the two key transactions involved in Bay al-Inah?
The two key transactions are the sale of an asset by a lender to a borrower and the immediate repurchase of the same asset by the lender at a higher price.
Why is Bay al-Inah considered compliant with Islamic principles?
Bay al-Inah is considered compliant because it avoids interest (riba) by structuring the transaction as a sale rather than a loan.
What are some advantages of using Bay al-Inah?
Advantages include providing liquidity without interest payments, flexibility in asset types, and compliance with Shariah principles.
How does the legal status of Bay al-Inah vary?
The legal status of Bay al-Inah varies by jurisdiction and among different Islamic financial institutions, with some accepting it and others rejecting it.