ctu351.docx - ABSOLUTION DUE TO PREPAYMENT OF DEBT It has...
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ABSOLUTION DUE TO PREPAYMENT OF DEBTIt has been stated that most banks do not use concept ibra in financing agreementdue to Shariah concern they fear that this concept will bring them gharar (uncertainty) in theselling price. Actually, ibra’ only can be given by the bank consideration without beinginserted prior to the agreement. This means that if the borrower refuse to obey theagreement he need to pay lump sump the selling price if the bank do not want to give himibra’. Full payment of the selling price of the bank can include unccrued profit for the entiretenure of the financing facility. By comparison, the borrower will only be obligated under aconventional loan to pay the balance of the loan plus accumulated interest and otherassociated costs, such as interest on late payments. To be competitive with theirconventional counterparty, Islamic banks must incorporate item such as ibra' into theirfunding 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 certaincondition and if the condition is satisfied, the ibra’ will be given. Referring to the discussionamong the scholars, the ibra' muqayyad and ibra' mu'allaq closely resemble describedpractices. Some scholars of the Hanafi and Shafi'i agree that the aforementioned ibra' is not