ctu351.docx - ABSOLUTION DUE TO PREPAYMENT OF DEBT It has...

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ABSOLUTION DUE TO PREPAYMENT OF DEBT It has been stated that most banks do not use concept ibra in financing agreement due to Shariah concern they fear that this concept will bring them gharar (uncertainty) in the selling price. Actually, ibra’ only can be given by the bank consideration without being inserted prior to the agreement. This means that if the borrower refuse to obey the agreement he need to pay lump sump the selling price if the bank do not want to give him ibra’. Full payment of the selling price of the bank can include unccrued profit for the entire tenure of the financing facility. By comparison, the borrower will only be obligated under a conventional loan to pay the balance of the loan plus accumulated interest and other associated costs, such as interest on late payments. To be competitive with their conventional counterparty, Islamic banks must incorporate item such as ibra' into their funding agreement. Then, There are two types of Ibra’ which is Ibra’ Muqayyad and Ibra’ Muallaqah Ibra’ Muqayyad is limited by certain condition while Ibra’ Mu’allaq which is subject to certain condition and if the condition is satisfied, the ibra’ will be given. Referring to the discussion among the scholars, the ibra' muqayyad and ibra' mu'allaq closely resemble described practices. Some scholars of the Hanafi and Shafi'i agree that the aforementioned ibra' is not
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