However guarantee is a voluntary transaction and no

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However, guarantee is a voluntary transaction and no fee can be charged on a guarantee. If the person who actually lends money cannot charge a fee, how can fee be charged by a person who has merely undertaken to pay and did not pay anything in actual terms? Who can provide a guarantee free of charge? They say that the prohibition of guarantee fee is not based on any specific injunction of the Holy Qur'an or the Sunnah of the Holy Prophet (PBUH). It has been deduced from the prohibition of riba as one of its ancillary consequences. Research needed in this area. 11 Issues in Murabahah Financing
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Default Penalty And if he (the debtor) is short of funds, then he must be given respite until he is well off. (2:280) “The well -off person who delays the payment of his debt, subjects himself to punishment and disgrace.“ Ahadith Late payment penalty cannot be charged. Central bank may develop a system where such defaulters may be penalized by depriving them from obtaining any facility from any financial institution CIB. In order to encourage timely repayment, late payment penalties are charged however they are transferred to the charitable account and cannot be mixed in the income of the bank. 12 Issues in Murabahah Financing
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No Roll Over in Murabahah In conventional system, roll-over actually means that another loan of the same amount is re-advanced to the borrower. The disbursement is not made but is shown in the books as repayment of the previous loan facility. The terms of the loan i.e., repayment date, interest rate are re-agreed. It should be clearly understood that Murabahah is not a loan. It is the sale of a commodity the price of which is deferred to a specific date. Once the commodity is sold, its ownership is passed on to the client. It is no more a property of the seller. What the seller can legitimately claim is the agreed price which has become a debt payable by the buyer. 13 Issues in Murabahah Financing
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No Roll Over in Murabahah Therefore, there is no question of effecting another sale on the same commodity between the same parties. The roll-over in Murabahah is nothing but interest pure and simple because it is an agreement to charge an additional amount on the debt created by the Murabahah sale. 14 Issues in Murabahah Financing
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Rebate on Earlier Payment When the Jews belonging to the tribe of Banu Nadir were banished from Medina (because of their conspiracies) some people came to the Holy Prophet Sall-Allahu alayhi wa sallam and said, "You have ordered them to be expelled, but some people owe them some debts which have not yet matured." Thereupon the Holy Prophet Sall-Allahu alayhi wa sallam said to them (i.e., the Jews who were the creditors): “Give discount and receive (your debts) soon.” The majority of the Muslim jurists, however, does not accept this hadith as authentic.
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