The most critical part of Islamic Banking transactions that differentiate to conventional products is the contract. The elements in the contract will differentiate between loan and murabahah (sales), Hire Purchase and Ijaarah Thummal Bay, savings and wadiah ya dhamanah, fixed deposit and mudharabah, which practiced in the conventional banks and the Islamic banks. According to Wahbah Zuhaily from the book of Usul Fiqh Al Islami, a pillar (rukn) of contract is essential part of the substance and essence of the matter to which it is related, whereby its absence means the matter will not exist and its presence means the matter will be present (Naim, 2010) .
In this case, some of the banks in Malaysia tend to practice the contract of Bay Inah to implement the ICC (Rahman Z. A., 2008) . According to Bay Inah contract, the credit card holder has to first buy an asset from the bank at an agreed price with deferment and he will sell back the asset to the bank afterwards to gain cash. The cash will be kept into a special account which enable the card holder to buy ‘on credit’ using the credit card.
The implementation of Bay Al Inah is debatable among the scholars however, the Shariah Advisory Council of Bank Negara Malaysia in its 18th meeting held on 12th April 2001/ 22 Muharram 1422 resolved that the mechanism of Islamic credit card which applies bai` inah concept to generate funds for credit purposes by a customer who requests for the Islamic credit card is permissible[1].
On the other hand, Al Rajhi Bank (Rahman Z. A., 2008) and Bank Islam Malaysia Berhad[2] use the alternative contract of Bay Tawarruq for ICC contract. In this case, Bay Tawarruq has same end result as Bay Inah, nevertheless, the contract of sales and purchase is performed with the involvement of third party.
According to Bank Islam Malaysia Berhad, Bay Tawarruq is the purchase of a commodity on deferred payment basis by way of either bai’ musawamah or bai’ murabahah. The commodity is then sold for cash to a party other than the original seller. In personal financing, a customer buys a commodity from the bank on a deferred payment basis and the immediately resells it for cash (wariq) to a third party. In this way, the customer can obtain cash without taking out an interest-based loan[3].
The International Fiqh Academy Council has passed 2 resolutions with regard to the contract of Tawarruq namely:
i. In 2005 the resolution of allowing the practice of classical Tawarruq provided that it fulfills all the necessary requirement of valid sale contract.
ii. In 2007, the council passed another resolution prohibiting Tawarruq if it is practiced as organized Tawarruq (Hasan, 2009) .
Hasan (2009) further added that in the Tawarruq contract, third party will pay cash, allowing the Mustawriq (the person who needs cash) to benefit from the money and has liability to pay the original seller of the commodity the selling price in a deferred manner. Though there was opposition to this practice, a majority of the jurists permitted Tawarruq provided that it fulfils all the requirements of a valid contract in both stages.
The other emergence contract used for ICC is contract based on Ujrah. This concept has been adopted by CIMB Islamic (CIMB Islamic, July 2010) and many of banks that currently introduce the ICC. This type of contract has not been discussed in detail in any literature therefore the implementation is still subject to debatable. The list of the banks and types of contract that has implemented the ICC is as shown below:
| No. | Banks | Types of contract |
| 1. | Bank Islam | Tawarruq[1] |
| 2. | Am Bank - At Taslif, TRUE | Bay Al-Inah[2] |
| 3. | BSN - Aiman | Ujrah[3] |
| 4. | HSBC Amanah; Premier Master Card, Advance Visa, Mpower | Ujrah[4] |
| 5. | CIMB Islamic | Ujrah[5] |
| 6. | Maybank Islamic - Ikhwan | Bay Al-Inah[6] |
| 7. | Bank Rakyat | Tawarruq[7] |
| 8. | RHB Bank | Ujrah[8] |
[1] http://www.bankislam.com.my/en/Pages/GoldClassicCard.aspx?tabs=2
[2] http://www.ambg.com.my/AmBank_webmedia/file/TNCIslamic.pdf
[3] http://www.bsn.com.my/perbankanislam/pdf/%28Ujrah%293082010T&C.pdf
[4] http://www.hsbcamanah.com.my/1/PA_1_1_S5/content/amanah/website/pdf/credit_card/mpower_tnc.pdf
[5] http://cb.cimbislamic.com/index.php?ch=ci_per_ca&pg=ci_per_ca_prod&ac=10&tpt=cimb_islamic
[7] http://www.bankrakyat.com.my/ikreditkad
No matter what is the contract used by the banks, the Muslims should not subscribe the conventional card since there are many ICCs in the market. From a survey that has been conducted in October 2010, out of 47 people who subscribe credit card, 43% still subscribe conventional credit card. This figure is very high as it is compared to the numbers of ICCs offered in the market. The banks as well as Muslims should play the role to promote and encourage other Muslims on the basis of brotherhood to save them from hellfire by leaving the element of riba.
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