Discuss & give comments on operational issues of BBA Home-financing in Malaysia or any other countries 2.

Comparisons between housing Loan, BBA and MM home financing 3. The importance of deposits mobilization in Islamic 4. What do you understand by Ar-Rahn? Explain banks

5. Describe the practices of Islamic trades finance in Malaysia or any other Isl amic countries that you know

Bai Bithman Ajil or BBA, is an Islamic financing product involving sale of goods where the sale price is payable on instalment basis. This type of transaction i s best referred to as "deferred payment sale". However, in easy to understand, i t's just a purchase of good on credit on the fixed assets e.g. houses, shophouse s, factories and other fixed assets. Under conventional banking perspective, banks do not engage in the business of s elling goods but grant loans repayable by monthly instalment where interest is c harged until the original loan amount is fully repaid. But, in Islam, interest c harge is considered as usury or riba, and it is Haram. BBA is widely applied by the Malaysian Islamic banking, but it seems they try to change into the better product such as Musyaraqah Mutanaqisah. In fact, it is a lso popular in Brunei and Bangladesh. Nevertheless, this concept is not accepted Islamic banks in the Middle East and Pakistan. This is because the majority of Shariah scholars in the region consider this con cept does not meet the original concept BBA. In fact, the Malaysian version of B BA is also seen as a combination of two concepts of Bai 'Inah (sale and buy-back ) and Bai Muajjal (sales to delay payment and installments). Hence, Islamic banks in the Middle East prefer other more emphasizes the concept of sharia by ijtihad meet their objectives such as Ijarah, Musharakah and other s. Put simply, BBA Malaysia version works like this: When looking to buy a house co sting RM200,000, a person will pay a sum of money to the seller / developer as a booking and then pay 10 percent, as a deposit. After gaining a sale and purchase agreement (S & P agreement) between buyer and seller, customer will find the Islamic banks that can provide financing him. When meet all the stated requirements, the bank agreed to buy the house for the customer for RM180, 000 by cash. Accordingly, the houses will be owned banks and bank ownership mark on the house is through the 'declaration of trust' and a 'charge' as a sign of the right for the bank on the house.Then, the Islamic banks will sell the house is the new pr ice to the customer For example, the new price is RM350,000 which can be paid by the customer in mon thly installments for 25 years or more, depending on the agreement. Before a person decide to buy a house, there are few consideration that they hav e to look at, first is the intereset rate charge or according to Islamic bank us ed as their profit rate,secondly the margin of financing, which how much loan th

ey can take, the loan tenure, which how long the allowed to settle the loan and the lock-in period which how much penalty they will imposed if they manage to se ttle the loan earlier that period they supposed to settle. Nowadays, People are in dilemma to find the suitable housing loan, which they co mpare among the Islamic and conventional financing. As for conventional, the ban k will charge interest depend on the OPR (Overnight Policy Rate) set by Bank Neg ara Malaysia (BNM). Bai Bithman Ajil or BBA, is an Islamic financing product involving sale of goods where the sale price is payable on instalment basis. This type of transaction i s best referred to as "deferred payment sale". However, in easy to understand, i t's just a purchase of good on credit on the fixed assets e.g. houses, shophouse s, factories and other fixed assets. BBA is popular in countries like Malaysia, Indonesia and Brunei. The MM or dimin ishing partnership is widely practiced in the Middle East, the United States, Ca nada, England and Australia. Shariah scholars from the Middle East generally dis approve of the BBA partnership contract. This is because the majority of Shariah scholars in the region consider this con cept does not meet the original concept BBA. In fact, the Malaysian version of B BA is also seen as a combination of two concepts of Bai 'Inah (sale and buy-back ) and Bai Muajjal (sales to delay payment and installments). In Malaysia, where the BBA, the voices of discontent were beginning to emerge fr om its customers. BBA criticized as unjust trading instruments compared to conve ntional system. What appears to be a problem in practice BBA is customer must sign the Sale and Purchase Agreement (S & P) and the developer / seller and pay a 10% deposit befo re getting bank financing. Then the bank will buy the right customer through the S & P and then pay the ful l price of the house to the developer / buyer before selling it back to the cust omer at the grace including the rate of profit. The fact of the situation in Malaysia, although a project is completed or abando ned fails, customers still need to pay monthly installment or pay a profit rate on the payment already made the bank to the developer / seller. Musharakah Mutanaqisah or MM also there are 2 parts, the first bank and the buye r will be partners in the ownership of a house owned bank's largest shareholder, while customers become minority owners. For example, banks 90%, while the remaining 10% is on the customer. Customers wi ll gradually dominate the share of bank-owned homes through monthly payments to own bank shares and at the end of the contract period, the house will become a w holly-owned by the customers. Besides, on the second part, banks, through the concept of Ijarah (lease. Under lease concept, the customer will pay rent to the bank along the monthly installm ent. The payment of house rental stock ownership decreases as the ratio of bank ownership shares purchased by the customer. In conclusion, based on the comparison of these three product, the customer must

make the choice for the sake of this world and also in the hereafter. it seems that MM have better advantages which have lower total of payment, and the custo mer also have potential to pay more and increase the shareholding and have great er potential to owns the house quicker than other product. But for BBA, also have owns advantages, such as, fixed selling price, by having fixed mark up monthly payment, and the customer actually still can get a discoun t when they pay earlier than the exact period.

http://www.zaharuddin.net/content/view/192/63/ http://ms.wikipedia.org/wiki/Bai%27_Bithaman_Ajil Islamic Home Financing through Musharakah Mutanaqisah and al-Bay racts: A Comparative Analysis by Ahamed Kameel Mydin Meera & Dzuljastri Abdul Razak Bithaman Ajil Cont