A critical study on the compliance of the Islamic banking system home financing in Malaysia to the syariah principles /Afiqah Amran...[et al.]

The area of study is on the Compliance of the Islamic Banking System Home
Financing in Malaysia to the Syariah Principles.The aims of studies are to critically
analyze about the Islamic Banking system in Malaysia focusing on home financing
and secondly, to determine whether the product of home financing in Islamic
Banking system in our country is in compliance with Syariah principles. These
analyses of study emerge from different aspects including the proper understanding
of concept Bai Bithaman Ajil and Musharakah Mutanaqisah in practice by the
financier and the various tools in Syariah principles such as Murabahah, Bai- at
Inah and Ijarah concept respectively.
This paper finds that Bai Bithaman Ajil still has some loopholes in this product
which not entirely accordance to the Syariah principle especially in the issue high
selling price which lead to the oppression of the customer. Musharakah
Mutanaqisah is a clear alternative to avoid interest and can reduce the cost of house
financing and ultimately the duration of financing. Even though Musharakah
Mutanaqisah has some weaknesses but it protects the benefits and public interests.
In comparison, Musharakah Mutanaqisah is well accepted and implemented
worldwide than Bai Bithaman Ajil As conclusion, Islamic banking and finance
must ensure that all of its transactions are Syariah compliant not only on its legal
technicalities and forms but more importantly the economic substance which is
premised on the objectives outline by Syariah,