IIFA’s 2009 tawarruq resolution: which arrangement does it address?

Identify the original

Issuer: the Council of the International Islamic Fiqh Academy (IIFA), an academy of the Organisation of Islamic Cooperation; the 2009 text uses the organisation’s former name, Organization of the Islamic Conference. Resolution 179 (5/19) was adopted in the 19th session in Sharjah, UAE, 26–30 April 2009 (1–5 Jumada al-Ula 1430H). Its official English page is titled “Essence and Types of Tawaruq (Fiqh Compliant vs Bank Structured)” and dated 30 April 2009.[IIFA][HIST]

Follow the sales, then ask who arranged them

IIFA permits the classical form subject to acceptable sale conditions. It prohibits the organised and reverse forms it defines, describing the coordination as a device for cash now against a larger future debt and identifying that as riba. These are the Academy’s attributed conclusions; a cash-flow resemblance alone is not this page’s verdict on a product.[IIFA]

The 2009 resolution also recommends Shariah-permissible financing/investment methods and encourages qard hasan, a benevolent loan without interest, including special funds for people needing cash. These are historical recommendations, not evidence that such a fund or facility is available to you today.[IIFA]

Why a Malaysian product needs its own source check

Malaysia has separately identified sources. Bank Negara Malaysia’s (BNM) Tawarruq policy was issued and became effective on 28 December 2018. The BNM Shariah Advisory Council (SAC), at its 199th meeting on 26 November 2019, permitted the proposed Straight-Through Processing (STP) execution subject to conditions. The official statement became effective on publication on 19 May 2020. It addresses transaction sequence/evidence, identifiable assets, agency roles, ownership/risk records and delivery rights.[TW][SAC][SN]

Keep issuer, date and scope together. The Malaysian statement does not amend IIFA’s text or establish agreement between the two bodies. STP means automated processing; a statement permitting a proposed method does not prove that a particular customer’s trades were executed correctly. The linked BNM register is a place to recheck documents, not a certificate for your facility.[SAC][REG]

Turn the distinction into useful questions

If you are considering personal financing-i for household expenses, ask for the Product Disclosure Sheet (PDS), dated terms and your offer. Identify the commodity, first seller, your purchase, resale buyer and any agent. Ask which sale creates your payment obligation and which resale produces cash. This is an editorial reading method, not a fictional bank offer or a reconstruction of executed trades.

For covered institutions, BNM’s Tawarruq policy requires relevant pre-contract disclosure, including price/cost and profit where murabahah is used, and applicable fees, rebate, late-payment charges, brokerage, agency fees and tax. It warns against quoting only a profit rate without the selling price or its computation. Ask for net cash after deductions, total scheduled payments and the basis for any early-settlement amount. No fee, rate, rebate entitlement or affordability result is calculated here.[TW]

Muslim readers may want to examine the religious reasoning as well as the contract. Non-Muslim readers can use the same ownership, payment and cancellation questions. As one concrete inclusion example, HSBC Amanah says its Personal Financing-i is open to eligible Muslim and non-Muslim customers. This does not establish eligibility for another product or approval for you.[FAQ]

The STP statement distinguishes step-by-step instructions from a blanket instruction. For a blanket instruction it describes disclosure before execution and the customer agreeing at the outset to waive taking delivery during automatic execution. Ask for the documented method and your actual instructions; this is not proof of a personal waiver.[SAC]

• Who arranges the resale, under which written authority?
• Can the asset, ownership sequence and transaction records be identified?
• How and when is the delivery option disclosed? The SAC STP statement allows disclosure before execution or following the asset sale to the customer; ask which method your documents use.
• What dated issuer decision is being cited, and what does it actually cover?

Access to the original text and commentary

The official resolution supplies the historical decision, but the complete old ISRA article was not recovered. Its exact wording and any additional commentary are not reproduced. The diagrams are newly authored explanations. There is no individual trade audit, customer approval, product-specific Shariah verdict or Proposed replacement and related-guide routes are planning metadata; equivalent content and routing still require a separate launch review.