Bai’ Al ‘Inah In Islamic Finance

UAE Laws and Islamic Finance

Bai’Al ‘Inah is a transaction which involves the sale and buyback of an asset by the seller:

1.The seller will sell the asset to the buyer on a deferred basis and later will buy back the same asset on a cash basis at a price, which is lower than the original selling price.

2. Alternatively, it could also be where a customer offers to sell some of his inventory to a bank for an immediate cash payment.  He then buys back the inventory on an installment basis, but at a higher price than the price he sold to the bank earlier.  The difference between the purchase price by the bank and the sale price by the bank is the bank’s profit.

It is generally known as a sale based on the transaction of Nasi’ah (delay):

  • The prospective debtor will sell to the prospective creditor some object for cash…

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