Md. Habibur Rahman, Md. Faruk Abdullah, Muhammad Nazmul Hoque and Abu Umar Faruq Ahmad
This study aims to investigate and propose the potential practice of hibah al-ʿumra as a Shari‘ah-compliant policy that would encompass the disbursement of death benefits and…
Abstract
Purpose
This study aims to investigate and propose the potential practice of hibah al-ʿumra as a Shari‘ah-compliant policy that would encompass the disbursement of death benefits and facilitate their smooth distribution among the projected beneficiaries of the family Takāful.
Design/methodology/approach
This study uses a qualitative approach. It conducts semi-structured interviews with different Takāful practitioners in Malaysia. This study also consulted a few Shari‘ah scholars regarding their opinions on the application of hibah al-ʿumra in disbursing family Takāful benefits. The thematic analysis is carried out to analyse qualitative data.
Findings
From both Shari‘ah and the relevant industry perspectives, the notion of hibah al-ʿumra has a great potential to disburse the family Takāful benefits to the Takāful participants or nominated beneficiaries. Given the conditional nature of hibah in Takāful, it is argued that there is a scope for imposing some conditions to make hibah al-ʿumra a life grant gift. This is expected to play a significant role in resolving the issues relating to the disbursement of family Takāful benefits among the beneficiaries, where it becomes irrevocable.
Practical implications
In the current practice of family Takāful, in the event of the recipient’s death or divorce, the application of absolute hibah results in the disbursement of Takāful benefits among undesirable beneficiaries. In contrast, in hibah al-ʿumra, it is expected that subject to a condition of withdrawal, its practice would help manage any unwanted situation if other potential beneficiaries are nominated upon signing the agreement at the outset.
Originality/value
This study is expected to contribute to help channel the family Takāful benefits into the desired beneficiaries being the proposed hibah al-ʿumra as a form of conditional hibah. Besides, this type of hiba can be treated as a solution in any adverse situation.
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Md. Habibur Rahman, Md. Faruk Abdullah, Noor Mohammad Osmani and Nur Suhailah Zakiyyah Binti Aziz
This study aims to investigate the possibility of practicing cross-subsidisation of underwriting surplus among different takaful operators. It responds to the recent discussion…
Abstract
Purpose
This study aims to investigate the possibility of practicing cross-subsidisation of underwriting surplus among different takaful operators. It responds to the recent discussion paper published by Bank Negara Malaysia (BNM) on broader application of tàawun (mutual assistance), which seeks insights into cross-tàawun of underwriting surplus within takaful industry.
Design/methodology/approach
A qualitative, semi-structured interview is used to gather primary data, featuring 13 one-to-one interviews with selected Sharìah and operational experts in takaful. Open-ended questions are drafted according to BNM’s discussion paper to guide the interview. A content analysis method is used to delve into the topic based on scholarly papers, books and regulatory guidelines. A thematic analysis is applied to explore the qualitative data.
Findings
This study establishes the feasibility of cross-subsidisation of underwriting surplus in takaful. Given that participants are the rightful owners of the underwriting surplus, cross-tàawun is deemed permissible with participants’ consent. With the view that underwriting surplus belongs to the fund due to outright transfer of contributions by participants, the regulators have discretion to permit cross-tàawun. The authorities can make any decision if it serves the public interest. Furthermore, the study provides Sharìah and regulatory requirements to govern the practice of cross-tàawun in takaful. Respondents of the study advocate for policy reviews and regulatory adjustments to facilitate cross-subsidisation of takaful surplus.
Practical implications
This study significantly contributes to the existing body of knowledge in Islamic insurance studies. It offers valuable insights for the regulators to formulate the required policies and guides takaful operators to develop products accordingly. Moreover, the study supports Sharìah scholars in making informed decisions about cross-tàawun practices.
Originality/value
This study fills a critical gap in the existing literature by being the first to examine cross-subsidisation of underwriting surplus in takaful. The proposed cross-subsidisation of underwriting surplus will enhance sustainability of takaful funds and contribute to stability of takaful industry. As a foundation, this study encourages future research to explore other relevant aspects of cross-subsidisation of underwriting surplus in takaful operation.
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Habibah Solehah Ramli, Md. Faruk Abdullah and Md. Kausar Alam
Islamic crowdfunding, an alternative way to finance social projects, is a new development in Malaysia. Little is known about its operation. This study aims to explore the practice…
Abstract
Purpose
Islamic crowdfunding, an alternative way to finance social projects, is a new development in Malaysia. Little is known about its operation. This study aims to explore the practice of Nusa Kapital, the first Islamic crowdfunding platform in Malaysia.
Design/methodology/approach
This study adopted a descriptive approach. The data was collected through document analysis and interviews with two officials of Nusa Kapital. The data gathered was analyzed through the thematic analysis technique.
Findings
This research discovered that Nusa Kapital was established considering the financing needs of the growing number of small medium enterprises (SMEs) in Malaysia. It uses the murabahah concept to make financing arrangements for entrepreneurs. Murabahah is a debt-based concept where the investors, instead of giving cash to the entrepreneurs, purchase an asset and sell it to them at a cost-plus profit. The Securities Commission Malaysia (SCM) regulates the crowdfunding operation of Nusa Kapital, which sets guidelines for the different types of investors, entrepreneurs and platforms. Nusa Kapital conducts an extensive background check of the company for its creditworthiness and takes the necessary measures for the transparency of the project's operation.
Research limitations/implications
This study has unique implications for the regulatory authorities and practitioners in Malaysia and global industries. The study explored the practical scenario of the crowdfunding institution, which will be beneficial for similar industries within and outside of the country.
Originality/value
While previous literature provides a theoretical discussion of Islamic crowdfunding, this study contributes to the body of knowledge by demonstrating its practice.
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Mohd. Fuad, Sawari, Razi Hassan and Faruk Abdullah
Considering the popularity of the premium savings certificate (PSC) of the National Savings Bank of Malaysia (Bank Simpanan Nasional (BSN)) the paper aims to justify the Shari'ah…
Abstract
Purpose
Considering the popularity of the premium savings certificate (PSC) of the National Savings Bank of Malaysia (Bank Simpanan Nasional (BSN)) the paper aims to justify the Shari'ah compliancy of this product by analyzing its underlying contracts and to propose a Shari'ah compliant savings certificate, if the current practice is invalid in the Shari'ah.
Design/methodology/approach
Inductive methodology is first used to obtain a basic understanding of this product and the characteristics of Shari'ah approved contracts as well as the views of the jurists. Interviewing method is also used to acquire first‐hand information when the inductive method is not sufficient. Afterwards, an analytical approach is adopted to justify the validity of this contract with the Shari'ah principles. Finally, an innovative methodology is used to propose a Shari'ah compliant savings certificate.
Findings
The paper argues that the underlying contract used in PSC violates the conditions of wadi'ah contract, as in wadi'ah, the bank is not allowed to spend the money for investment, but in practice, BSN uses the money for investment. Therefore, the underlying contract in PSC turns into qard (loan) contract. Since the scholars unanimously declare that giving any kind of benefit like prizes to the creditor is riba, then PSC is considered as invalid according to the Shari'ah. On the other hand, although PSC might seem like gambling, it is different from gambling as the prizes given to PSC are from a third party. The paper proposes implementing mudarabah contract in PSC where the bank is allowed to invest according to its interest and the depositors share the profit and loss but the huge fluctuation of profit and loss could be shrunk by a special fund method.
Originality/value
In particular, it attracts the attention of BSN management to change their product's features. In general, it discovers a non‐Shari'ah compliant feature of savings certificates and outlines the feature of a Shari'ah compliant saving certificate for the practitioners of Islamic banking all over the world.
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Md. Faruk Abdullah and Asmak Ab Rahman
The objective of the chapter is to discuss the role of wa’d (promise) to mitigate risk in different Islamic banking products. The chapter will illustrate the element of wa’d in…
Abstract
Purpose
The objective of the chapter is to discuss the role of wa’d (promise) to mitigate risk in different Islamic banking products. The chapter will illustrate the element of wa’d in different Islamic banking products in Malaysia.
Methodology/approach
The study has adopted the document review method to get information on different banking products. Moreover, it conducted semi-structured interviews with bankers to get in-depth information.
Findings
The study finds out that wa’d plays a vital role in structuring several products including retail products, trade financing products, and treasury products. Along with the unilateral wa’d there is a usage of double wa’d (wa’dan) in some product structures. In most of the products, wa’d is included as a risk mitigation instrument along with other major underlying Shari’ah contracts. Some Shari’ah issues are involved with these products namely the Shari’ah rulings related to wa’dan, “form over substance,” etc.
Originality/value
This is an in-depth field study which adds new knowledge on wa’d-based products. The experience of Malaysia might be a lesson for other countries to minimize risk in their Islamic banking products.
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The purpose of this paper is to analyze the human capital theory from an Islamic perspective. It studies the primary sources of Islam to discover its contribution towards human…
Abstract
Purpose
The purpose of this paper is to analyze the human capital theory from an Islamic perspective. It studies the primary sources of Islam to discover its contribution towards human capital development.
Design/methodology/approach
The paper adopts inductive and analytical method to interpret Islamic viewpoints towards human capital development. It studies the classical and modern sources of Islamic law and analyzes scholars' opinions.
Findings
In fact, human capital theory has a different understanding in Islam, due to its different objectives. However, it resembles the conventional theory in the way that it urges the development of human beings in education, skills and abilities. Islamic teachings contribute a lot to foster development among the individuals in every aspect of their lives. The way Islam gives incentive to development is unique; because, with the improvement of education, good skills, work and production, physical health and perfection, it is concerned about the moral and ethical development of employees, which is no doubt having a great effect in the development of the organization. Moreover, Islamic society plays an important role in nurturing enthusiastic and competent individuals.
Originality/value
It is expected that the paper would be of interest to Muslim authorities, as a means to motivate their employees, as well as to share ideas across the academic disciplines.
Details
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Md. Faruk Abdullah and Asmak Ab Rahman
– The study aims to consider wa’dan-based products in Islamic banks in Malaysia and discuss the validity of wa’dan in those products from the perspective of Shari’ah.
Abstract
Purpose
The study aims to consider wa’dan-based products in Islamic banks in Malaysia and discuss the validity of wa’dan in those products from the perspective of Shari’ah.
Design/methodology/approach
Case studies were conducted of three Islamic banks in Malaysia. Semi-structured interviews were carried out with bankers as well as Shari’ah scholars. The document analysis method was adopted to strengthen the findings.
Findings
The study shows that three Islamic banking products: Musyarakah Mutanaqisah (MM) home and property financing; Al-Ijarah Thumma Al-Bai’ (AITAB) vehicle financing; and Ijarah rental swap (IRS) use wa’dan in their product structures. After discussing the different views of the scholars, the study concludes that wa’dan should be allowed in the above-mentioned products because it is different from muwa’adah. In wa’dan, every single wa’d is separate from each other, as every one of them is related to different types of events. With regard to the issue of Shari’ah in MM home and property financing, it was concluded that wa’d from the customer to purchase the bank’s share is not a capital guarantee. Moreover, IRS is not a form of gambling but is in line with Maqasid al-Shari’ah.
Research limitations/implications
The study is limited to three Islamic banks in Malaysia that focus on retail and commercial banking products. Therefore, the study excludes application of wa’dan in sukuk and some other Islamic derivatives that are not the practice of these three banks.
Originality/value
This empirical study adds new knowledge by developing the concept and practice of wa’dan. Wa’dan as an innovative tool for product development to overcome Shari’ah issues in conventional banking may be of interest to practitioners all around the world.
Abul Kalam, Md Jahangir Alam, Lubaba Basharat, Golam Faruk Sarker, M. Abdullah Al Mamun and Abu Hossain Muhammad Ahsan
This study aims to evaluate the current educational opportunities available to hermaphrodite (Hijra) students, analyze their difficulties while pursuing academic degrees and…
Abstract
Purpose
This study aims to evaluate the current educational opportunities available to hermaphrodite (Hijra) students, analyze their difficulties while pursuing academic degrees and suggest potential approaches to address these issues.
Design/methodology/approach
This research used a qualitative method to analyze the challenges Hijra individuals face in pursuing education. A total of 20 interviews were conducted with two Hijra groups those who are pursuing an education and those who have abandoned it to collect primary data. The purposive sampling technique was used to identify and choose diverse sources of information. Moreover, the phenomena have been comprehended using the Access Theory and the Gender Stratification Theory.
Findings
The findings show that although every Bangladeshi has the right to a decent education, few Hijra youngsters attend schools. Numerous barriers, such as discriminatory views and remarks about third-gender people, physical and mental harassment, a lack of emotional and financial support, family issues, discrimination in the school community and hostility from classmates and teachers, make it difficult for hermaphrodite students to receive a proper education.
Originality/value
This research paper fills a gap in the current body of knowledge by presenting empirical evidence regarding young people’s perceptions of the third-gender, the societal barriers faced by Hijra individuals in their pursuit of quality education, their future opportunities, the root causes of these challenges and possible solutions.