[vc_row css=”.vc_custom_1614415908680{padding-right: 50px !important;padding-left: 50px !important;}”][vc_column width=”1/2″][vc_column_text]Istijrar means purchasing goods time to time in different quantities. In Islamic jurisprudence, Istjrar is an agreement where a buyer purchases something from time to time; each time there is no offer or acceptance or bargain. There is one master agreement where all the terms and conditions are finalized. There are two types of Istijrar:[/vc_column_text][slzcore_item_list_sc icon_type=”02″ icon_color=”#69276f” array_content=”%5B%7B%22content%22%3A%22Whereby%20the%20price%20is%20determined%20after%20all%20the%20transactions%20of%20purchase%20are%20complete.%22%7D%2C%7B%22content%22%3A%22Whereby%20the%20price%20is%20determined%20in%20advance%2C%20but%20the%20purchase%20is%20executed%20from%20time%20to%20time.%22%7D%5D” icon_fw=”fa fa-check”][vc_column_text]The first kind is relevant with the Islamic mode of financing. This kind is permissible with certain conditions.[/vc_column_text][slzcore_item_list_sc icon_type=”02″ icon_color=”#69276f” array_content=”%5B%7B%22content%22%3A%221.%5CtIn%20the%20case%20where%20the%20seller%20discloses%20the%20price%20of%20goods%20at%20the%20time%20of%20each%20transaction%3B%20the%20sale%20becomes%20vaIid%20only%20when%20the%20buyer%20possesses%20the%20goods.%20The%20amount%20(price)%20is%20paid%20after%20all%20transactions%20have%20been%20completed.%22%7D%2C%7B%22content%22%3A%222.%5CtIf%20the%20seller%20does%20not%20disclose%20every%20time%20to%20the%20buyer%20the%20price%20of%20the%20subject%20matter%2C%20but%20the%20contractors%20know%20that%20it%20is%20being%20sold%20at%20market%20value%20and%20the%20market%20value%20is%20specified%20and%20determined%20in%20such%20a%20manner%20that%20it%20does%20not%20vary%20and%20does%20do%20not%20lead%20to%20differences%20of%20the%20contractors%2C%20then%20the%20sale%20would%20be%20void.%22%7D%2C%7B%22content%22%3A%223.%5CtIf%20at%20the%20time%20of%20possession%2C%20the%20price%20of%20the%20subject%20matter%20was%20unknown%20or%20the%20contractors%20agree%20that%20whatever%20the%20price%20shall%20be%2C%20the%20sale%20will%20be%20executed.%20However%2C%20if%20there%20is%20significant%20difference%20in%20the%20market%20price%20and%20the%20agreed%20price%2C%20it%20may%20cause%20conflict.%20In%20such%20a%20case%2C%20at%20the%20time%20of%20possession%2C%20the%20sale%20will%20not%20be%20valid%2C%20rather%20the%20sale%20will%20be%20valid%20at%20the%20time%20of%20settlement%20of%20the%20payment.%22%7D%5D” icon_fw=”fa fa-check”][vc_column_text]The validity will relate to the time of possession. Therefore, the ownership of the buyer in the subject matter will be proved from the time of possession. After the payment of price, the buyer’s usage of the subject matter will be valid from the time of the possession.[/vc_column_text][/vc_column][vc_column width=”1/2″ css=”.vc_custom_1613028045920{margin-top: 0px !important;border-top-width: 0px !important;padding-top: 0px !important;}”][vc_column_text css_animation=”none” css=”.vc_custom_1614415871024{margin-top: 0px !important;margin-bottom: 0px !important;border-top-width: 0px !important;border-bottom-width: 0px !important;padding-top: 0px !important;padding-bottom: 0px !important;}”]
Uses of Istijrar
The concept of Istijrar can be applied in Murabaha in the following manner:
The bank may use the concept of Istijrar for purchase of goods from suppliers and then to sell them based on lstijrar with some amount of profit on deferred payment basis. This product will work suitably when the bank purchases the goods directly from the supplier and then sells them to the buyer. As in this case, the goods will be in the ownership as well as in the risk of the bank till it sells them to the buyer, so that makes the contract of sale valid and earning profit on such a transaction will be permissible (Halal).
Conversely, if the bank appoints the buyer as its agent to procure the goods, and he purchases them from time to time and utilize them, then it would not be possible to ascertain the point at which the ownership and the risk of the goods passed to the buyer. To make an Istijrar a viable product, following mechanism may be used:[/vc_column_text][slzcore_item_list_sc icon_type=”02″ icon_color=”#69276f” array_content=”%5B%7B%22content%22%3A%221.%5CtThe%20bank%20enters%20an%20lstijrar%20agreement%20with%20the%20purchaser%20to%20sell%20different%20commodities%20to%20the%20extent%20of%20some%20specified%20(say%20X%20amount)%20limit%20on%20a%20cost%20plus%20some%20profit%20basis.%22%7D%2C%7B%22content%22%3A%222.%5CtThe%20purchaser%20sends%20a%20purchase%20requisition%20letter%20to%20request%20the%20purchase%20of%20specified%20commodities.%22%7D%2C%7B%22content%22%3A%223.%5CtSimultaneously%20or%20just%20after%20signing%20the%20Istijrar%20agreement%20with%20the%20purchaser%2C%20the%20bank%20agrees%20with%20the%20supplier%20either%20to%20purchase%20the%20goods%20on%20normal%20spot%20%2F%20credit%20payment%20basis%20or%20the%20bank%20may%20also%20enter%20a%20parallel%20Istijrar%20agreement%20to%20purchase%20the%20goods%20on%20market%20prices%20whereby%2C%20the%20payment%20may%20be%20made%20in%20advance%20or%20after%20the%20delivery.%22%7D%2C%7B%22content%22%3A%224.%5CtAfter%20receiving%20the%20purchase%20requisition%20from%20the%20customer%2C%20the%20bank%20sends%20a%20purchase%20requisition%20letter%20to%20the%20supplier%20to%20order%20him%20to%20deliver%20the%20goods%20to%20the%20bank%20or%20its%20authorized%20representative%20or%20ask%20him%20to%20deliver%20them%20to%20the%20purchaser’s%20premises%20on%20bank’s%20behalf.%20After%20taking%20possession%20of%20the%20good%20and%20making%20the%20supplier%20its%20agent%20to%20deliver%20the%20goods%20to%20the%20customer%2C%20the%20goods%20will%20remain%20in%20the%20ownership%20and%20risk%20of%20the%20bank.%22%7D%5D” icon_fw=”fa fa-check”][/vc_column][/vc_row][vc_row css=”.vc_custom_1614415925904{padding-right: 50px !important;padding-left: 50px !important;}”][vc_column][vc_column_text]It should be noted that a template purchase requisition letter should be prepared in such a way that it completely mentions the specifications of the goods. A confirmation letter should also be sent from the supplier to the bank and then from the bank to the purchaser describing all details of the goods and their prices, to avoid any ambiguity in the subject matter as well as in the price that may lead to any dispute.
By: Dr. Muhammad Imran Ashraf Usmani[/vc_column_text][/vc_column][/vc_row]
