TAWARRUQ

PRESENTER BY:
HATTA
MAWI
NAZIR
RAFI

CONTENT

Definition of Tawarruq

Polemics of Tawarruq

Type of Tawarruq

Modus Operandi

Major Prohibited Element

Issue in Tawarruq
Conclusion

DEFINITION OF TAWARRUQ
A tawarruq is an Islamic financial product which allows clients to
raise money quickly and easily, in theory without breaking Muslim
bans on interest.
A customer buys an easily saleable asset from an Islamic bank at a
marked up price, to be paid at a later date, and quickly sells the
asset to raise cash.
document offer to purchase (otp) seller n buyer.pdf
LO for Consumer Restructuring OD - 110809 - Copy.doc
Participant :
Bank
Customer
Broker A - Seller/Buyer
Broker B - Seller/Buyer

POLEMICS OF TAWARRUQ
OIC Fiqh Academy
1st Opinion (September 1998)
Permited tawarruq with a condition that customer does not sell the commodity to its
original seller
2nd Opinion (December 2003)
Distinguish between tawarruq haqiqi (real/classical) and tawarruq munazzam or
masrafi (organised). The latter is disallowed as deemed to be synthetic and similar to
`inah.
3rd Opinion (April 2009)
Reinforce

its position on disallowing Organized Tawarruq as well as Reverse

Tawarruq since the transactions are deemed to contain element of riba.

Hanafi Schools Abu Yusuf, Shafiis and Hanbalisview

Allowing tawarruq mainly arguing that the presumption that the parties intended
to circumvent riba was quite remote due to its tri- partite nature
Ibn Qayyim and Ibn Taimiyyah (from Hanbalis)
Disallowed tawarruq and dismissed it as a legal trick (hilah) similar to bay` al`inah
Shariah Advisory Council of Bank Negara Malaysia and Securities
Commission
Following the Shafi`is opinion in allowing both bay al-`inah and tawarruq.
Questioning the validity of companions report on nullifying bay al-`inah.
Arguing that not all hilah is permitted; only that denies the right of people or
involve in falsehood (bathil) or demeaning the religion.
Based on public interest consideration (maslahah), which is to overcome the
problem of liquidity shortage in the country, without resorting to conventional
riba-based liquidity instruments and transactions.

Type of Tawarruq
Classical Tawarruq defined as the purchase of a commodity possessed
owned by the seller for a delayed payment, whereupon the buyer resell to
the commodity for cash other than the original seller in order to acquire
cash.
Organized Tawarruq

is the transaction that a person (mustauriq) buys

commodity from local or international market at a deferred price.

Simultaneously, he (mustauriq) will ask the financier in his own capacity or
through his agent or by special agreement with mustauriq to rearrange the
sale transaction usually at a lower spot price

MODUS OPERANDI CLASSICAL OF TAWARRUQ

1
1
A

3
3

4
4

2
2

5
5

MODUS OPERANDI ORGANISED OF TAWARRUQ

7
7
B

5
5
2
2

6
6

4
4

3
3

1
1
A

ISSUES IN TAWARRUQ
Issues pertaining to commodities
Issues pertaining to possession & delivery
Issues pertaining to Bay al- Inah
Issues pertaining to agency