The project ma be on any financial instrument/arrangement by an Islamic bank in Malaysia.

You will be required to get hold of a financial instrument, report on working of the instrument and its Shariah appraisal. The case study is expected to involve a detailed report on an Islamic bank in Malaysia giving its history, financial products for both retail and corporate banking (with the help of specific examples), treasury management and risk management by the respective bank. The IFIs make up ruses (hiyal) to manufacture products and services that are only legally Islamic or Shariah-compliant. But there isnt much difference in operation between IFIs and conventional nancial institutions. This being the case it is no wonder that conventional nancial institutions are aggressively grabbing their share of this niche market as they can easily adapt the form of their operations. Yet in reality they have less risk in the Islamic market, while earning prot that is comparable to or better than that which they earn in their conventional market. Bank profitability has been postulated to determine the banks performance, as profit reflects how a bank performed. However, the factors that determine bank performances have been divided into internal factors and external factors. Internal factors include capital ratio, bank size, liquidity, expenses management and asset quality. These factors are referring to the factors that can be managed by the management of a bank. For the external factors, we have included gross domestic product (GDP), inflation, money supply and competition where all these factors considered beyond the control of a banks management. It is mostly the macroeconomic factors. Capital Ratio In this study, we found there is an insignificant negative relationship between capital ratio and the profitability of Islamic banks. Although capital is not significant to affect the profitability of Islamic bank, however, a high capital ratio is still assumed has its supportive function on banks stability. Therefore, Islamic banks should always remain on the level set by government to ensure the stability of banks and tolerate with Islamic banking regulations. Bank Size Bank size of the banks was represented by the total asset of the bank. We found a significant positive relationship between bank size and profitability of Islamic banks. Bank size is a significant variable in determining the profitability in Islamic banks. Due to the Islamic banking regulation, Islamic banks are not allowed to involve in high risk activities; therefore, Islamic banks can raise their total asset by increasing the loan to customers. Islamic banks should improve their asset quality by lower the loan losses reserve to total loan ratio in order to maximize profit. According to our finding, lower loan losses reserve to total loan ratio will show a higher profitability of a bank. Islamic banks can tighten their regulation of lending to avoid or reduce default rate and credit risk. When default rate and credit risk decreased, loan loss reserve will decrease as well. Lower loan loss reserve will indicate a lower asset quality ratio, and Islamic bank can earn a higher profit since banks have more money to increase financing activities.

Islamic finance is one of the fastest growing segments of global financial industry. In some countries, it has become systemically important and, in many others, it is too big to be ignored. Several factors have contributed to the strong growth of Islamic finance, including:(i) strong demand in many Islamic countries for Shariah-compliant products; (ii) progress in strengthening the legal and regulatory framework for Islamic finance; (iii) growing demand from conventional investors, including for diversification purposes; and (iv) the capacity of the industry to develop a number of financial instruments that meet most of the needs of corporate and individual investors. It is estimated that the size of the Islamic banking industry at the global level was close to US$820 billion at end-2008 (IFSB et al, 2010). During the last decade and a half, Islamic banking has made remarkable progress and it had been adapted by many countries and region in the word, lately the statics had shown that more than 50 Islamic banking institutions are working in different parts of the world and at least three countries have declared their intentions and also taken some initiative steps to reorganize their entire banking system along Islamic lines. This indicates that Islamic finance successful operation of Islamic banks in several parts of the world has led to a growing interest in Islamic financing techniques. The objective of Islamic banking will lies on overall objective of Islamic economic. It is to promote and develop what is good and prevent what is bad. Islamic law constructed in way that catering the well-being of the people in this life and hereafter. Islam considers man as vicegerent of Allah. He it is who made you vicegerent in the earth (6:165).Therefore, all the human activities must ensure the benefit of human being To ensure the fulfillment of broad objective of Islamic law, Islamic banking and finance must fulfill the secondary objectives which are: to create society of investors not debtors, to ensure wealth does not circulate among the few rich, to promote high moral standard and ethical values, to promote justice and equitable distribution of wealth. (Muhammad Ayub 2007)

What are we to make of these developments? In the case, for example, of the sukuk that bear predetermined returns, it is fair to say that not so long ago, it was unthinkable to even talk about an Islamic financial instrument, especially a bond that would guarantee a fixed return. Since 2001, when the Bahrain Monetary Authority issued Islamic leasing certificates with a five year maturity to the value of $100 million, it has become a reality to offer sharia- compatible fixed returns. Thus the sukuk al-ijara financially engineers the payoff profiles, generating returns to bankers and investors that are, being derived from the levying of a cost-plus rate of profit formula, as fixed, certain and safe under Islamically-compliant financing modes as any interestbased conventional loan. Moreover, they are openly advertised as such. For example, the certificates for the first sharia-compliant securitized market financing of US assets are structured sothat Islamic investors effectively get a fixed rate of return (11.25 per cent annually) while considering themselves owners of the underlying assets. An official sharia adviser issued a fatwa, or declaration, certifying that the instrument will yield returns, Allah willing, that are lawful and wholesome (Business Week, July 17, 2006, p9). Opinions on these new products differ markedly. El Qorchi (2005), viewing them from a multilateral bank perspective, recognizes the competitiveness of many of the products in attracting both Muslim and nonMuslim investors, while the asset-based bonds (sukuk) are seen as a particularly innovative, rapidly growing market sector tapped by sovereign and corporate borrowers alike. Many innovative new products such as sukuk built around mark-up financing methods have allowed banks and their clients to engage in investment, hedging and trading activities that would have been almost incomprehensible not so long ago. But do these instruments go too far? Unlike other financial arrangements, the Islamic system must meet another test, the religious test, and remain within the scope of Islamic law. Fahim Khan (2007) sets out the case for sukuk and other newly developed instruments enabling participants in Islamic financial markets to borrow and invest and manage liquidity along conventional lines. He is convinced that fixed interest rate government debt along conventional lines has to be replicated with fixed return, negligible risk, Islamic securities, based upon mark-up arrangements, if a successful secondary market is to develop that can rival those in conventional financial systems. A fixed return is attractive to borrower and lender alike, and in the absence of liquidity the demand for the securities from ultimate investors and financial institutions will be greatly reduced. Khan is probably correct in this judgment. But the question then becomes one of whether, in the process of achieving this objective, desirable as it may be, the baby is thrown out with the bathwater (Hassan and Lewis, 2007a). Certainly, one can discern unease in some circles as to the pace of innovation and the direction of change inIslamic capital markets in the current decade (Hamoudi, 2006; Neinhaus, 2007). If Islamic banking merely modifies conventional financing in such a way as to satisfy the sharia scholars, there is then the question of what is there that remains distinctive about the Islamic system? In short, what is the essential point of departure between the two systems? Should the adaptive devices come to dominate the system and come to be regarded as tantamount to legal fictions (hiyal), there could be the danger that Islamic banking begins to look like an issue of branding, like Mecca Cola instead of Coca Cola (Hassan and Lewis, 2007b). In these circumstances are any real purposes being served? Chapra (2007) thinks that there are. One way of introducing his argument is by noting that the growth of financial systems in the West has been described by a number of writers (forexample, Martin, 2002; Stockhammer, 2004; Froud et al, 2006) as driven by what is termed financialization. Financialization can be seen as a process of economic

change in which the structure of advanced economies has shifted increasingly towards the provision of financial services and where the value of financial assets greatly exceeds that of tangible assets. As part of this change, managerial culture and behavior, corporate governance, executive remuneration and the distribution of income and wealth are all substantially modified by the demands of financial capital .Foster (2007) describes the process of financialization as one in which there is a decoupling of financial activity from productive tangible asset investment: Although orthodox economists have long assumed that productive investment and financial investment are tied together - working on the simplistic assumption that the saver purchases a financial claim to real assets from the entrepreneur who then uses the money thus acquired to expand production - this has long been known to be false. There is no necessary direct connection between productive investment and the amassing of financial assets. It is thus possible for the two to be decoupled to a considerable degree. Against this backdrop, let us now return to the views of Chapra. He considers that differences do remain between conventional lending and sales-based financing (via, say, murabaha or ijara), and that these are important in two respects. First, because the seller of goods (the financier) must legally own and possess the goods being sold, he argues that speculative short-selling is ruled out, helping to curb the type of excessive speculation that takes place and has been so evident recently in conventional financial markets. Second, the sales-based financing methods do not involve direct lending and borrowing but comprise purchase or lease transactions based on real goods and services. Financing in the Islamic system thus tends to expand pari passu with the growth of the real economy, constraining excessive credit creation and limiting one of the causes of instability in the international markets. In similar vein, El-Gamal (2007), while more critical of recent developments, sees some mitigating elements in synthetic loan structures based on credit sales and leasing, since they represent a form of secured lending that limits excessive borrowing by virtue of the fact that debt-based financing rises in line with the growth of the assets financed. In short, unlike many of those financial systems in the West, Islam financial markets are not, as yet, marked by a decoupling of financial activity from tangible 1.Intro 2.Why Musharakah Mutanaqisah ( i.e we can compare with BBA since BBA has many drawbacks ) 3.General about Musharakah Mutanaqisah 4.Shariah Appraisal ( here we can iclude opinion of different scholars, also short LR ) 5.General practice and issues 6. Conclusion

BBA (al-Bay` Bi-thaman Ajil) is a sale contract which is based on Murabahah concept. The bank purchases the house with lump sum price and immediately sells it back to the client with the cost plus profit, which is to be paid back on installments. (Noreema, 2008) For example, a client proceeds to the bank and applies to the bank to buy for him a house according to his interest which costs RM 100,000. Upon acceptance of the application, the bank purchases the house on cash price and then sells it back to the client by RM 150,000 By RM 100,000 with cash price and then sells it back to the client with installments of 20 years. So, RM 50,000 is the profit of the bank which will be paid within 20 years. In reality, the profit rate is determined based on the interest rate in conventional banking. Besides, in practice some banks just provide money to the client but do not purchase the house from the very outset. Therefore, BBA has been criticized by many Islamic scholars. Based on the above, the difference between MM and BBA home financing could MM is a joint ownership of the property, the BBA is a debt type financing which resembles to conventional loan. The return of BBA is fixed selling price which cannot be changed but the return of MM is the rent of the property which can be revised anytime. In MM the customer can withdraw the contract at the middle if he gets difficulties but in BBA the client is obliged to pay the fixed amount. In BBA the client owns the house immediately after the contract, but in MM he becomes owner of the house after the tenure. Therefore, MM should be the better alternative to BBA home financing as it is more flexible for the customers since they can pay the rentals according to the market price. MM is closer to the objective of the Shari`ah as the bank and the client become co-owner of the property thus they co-operate each other. Besides, Meera and Abdul Razzak argued that MM can prevent the creation of new money if it is implemented by the housing cooperatives. This is because Islamic Banks under the fractional reserve banking system are allowed to create fiat money out of nothing to disburse in the Islamic financing modes which creates a macroeconomic problem. (Meera & Abdul Razak, 2005) The Musharakah Mutanaqisah Partnership (MMP) contract, on the other hand, is based on a diminishing partnership concept. The MMP consists of three contracts, example musharakah, ijarah and bay. First, the customer enters into a musharakah under the concept of Shirkat-alMilk (joint ownership) agreement with the bank to co-own the asset being financed. Second, the bank leases its share in the asset ownership to the customer under the concept of ijarah. For example, customer pays a% of the asset cost as the initial share to co-own the asset whilst the bank provides for the balance of b%. Third, the customer gradually buys the banks b% share at an agreed portion periodically until the asset is fully owned by the customer .The periodic rental amounts will be jointly shared between the customer and the bank according to the percentage share- holding at the particular times which keeps changing as the customer purchases the financiers share. The customers share ratio would increase after each rental payment due to the periodic redemption until eventually fully owned by the customer.

Musharakah Mutanaqisah can be used as instrument in home financing. Both bank and customer jointly purchase the property then the bank leases its share of property to the customer. who undertakes to incrementally acquire the full ownership of the property from the banking institution over an agreed period. Once the customer has fully acquired the banking institutions share of the property, the partnership comes to an end with the customer becoming the sole owner of the property. This contract incorporates elements of both sale and lease or in ijarah contracts, which are essential in ensuring that no element of riba is involved in the Musharakah Mutanaqisah transaction. International Journal of Business and Social Science 1; October 2010 Vol. 1 No.

The Islamic banking and finance was first established on the principle of profit and loss sharing (PLS) and the prohibition of riba (usury). As an alternative to riba, it is anticipated that PLS mode of financing will notably eradicate the inequitable distribution of income and wealth and may escort to a more efficient and optimal allocation of resources. Studies however, have shown that there has been a complete shift in Islamic banking and finance from supposedly PLS banking to a sales-based and debt-based system (Saeed, 2004; Dusuki and Abozaid, 2007; Asutay, 2007). The activities of Islamic banks depend largely on contracts that are regarded as mark-up based, which is similar to lending on the basis of fixed interest. The use of the more risky PLS contracts such as a Mudharabah and Musharakah has been very minimal. This type of option arises only if the contract has been concluded. If the contract is still in the state of negotiation or still under discussion, the affected party cannot exercise this option. If anything appears in the subject of the contract which does not match its original use or decreases its conventional market value, or makes it unfit to meet requirements expected of it, then the buyer have the right to exercise option of defect, as freedom from defects is the right of the buyer given in any commercial transactions. Purpose of the Option If the defect reduces the value of the object, so it is only fair to give the party a choice as when the subject matter has defect, the consent or satisfaction of parties involved are one-sided. Allah S.W.T prohibits taking money of others illegally and command that trading should be conducted with mutual consent as stated in an-Nisa:29.

O ye who believe! Eat not up your property among yourselves in vanities: but let be there amongst you traffic and trade by mutual good will: nor kill or destroy yourselves: for verily God any hath been to you Most Merciful! The Prophet s.a.w says: A Muslim is a brother to another Muslim. It is illegal for a Muslim to sell his brother a deficient thing unless he makes it clear to him It is illegal for someone to sell something without showing its real qualities; and it is illegal for someone who knows about it not to show it. It is reported that the Prophet s.a.w passed by someone selling foodstuff. He (the Prophet) put his hand in it and found it wet, then he said, He who cheats us is not one of us The Mejelle, Article 336:Any buyer in Islamic law has an automatic implied warranty against latent defects in the goods purchased. Conditions under which right of option of defect cannot be exercised: When the buyer, after he has known the defect in the subject matter, insists or continues on buying the thing. When the buyer knew the defect in the subject matter but transfers or gives it to other persons as a gift or as a selling thing. He loses his right of option of defect. When the seller sells a thing with a condition that he shall not be made liable for any defect in the subject matter and the buyer agreed upon that condition. The buyer loss his right of option of defect. If the defect is slight and if it does not reduce the value of the object, and if it is conventional to overlook it, then the party cannot use it as a pretext to return the sold object

If the new defect occurs in the subject matter while it is in the possession of the buyer and he discovers that the object had an old defect while it was in the possession of the seller, then the buyer can claim the reduction of the value but he cannot return the object.

What if the buyer keeps silent of the defect in the subject matter The right of khiyar will not be available if the defect is the one which could be apparent with usual examination and the buyer knows of it.

However, if the defect does not appear at the usual examination, the option is never dropped.

dam Ng Boon Ka, law graduate from the University of Oxford and PhD candidate at the International Centre for Education in Islamic Finance, Malaysia, takes a close look at this type of financing.

Deemed as a better alternative to bay bithaman ajil (BBA sale of goods on a deferred payment basis) a study on the issues of musharakah mutanaqisah (MM) is timely for a more equityoriented and Islamic universal banking philosophy. Some may view diversification of product space to fulfil the expectation of Shariah compliance as driving factors behind the offering of MM. However, one seldom comes across roses without thorns. And, the worrisome thorn in the side of Islamic finance is the limited use of MM, notwithstanding its appeal as a Shariah -based innovation.

Drawing lessons from the BBA conundrum as a result of the Malaysian High Courts prohibitive judgment in July 2008 (which has been reversed by the Appellate Court in 2009) and rejection by the Middle East, there is a need to mitigate Shariah and legal risks for future Islamic financial products. The Shariah and legal issues may be deciphered by examining the legal documentations of various banks, such as Kuwait Finance House (KFH), Maybank Islamic, RHB Islamic and Citibank, offering MM in Malaysia. At the outset, these documentations may not be fully reflective of the true event, although credit should be given to some well-drafted clauses in tandem with the Shariah (e.g. no payment of interest) and overall compliance with Shariah requirements.

MM is a diminishing partnership, whereby one of the partners promises to purchase the equity share of the other partner until the ownership of the equity is completely transferred to him. The ijara structure may be embedded in the MM structure to facilitate a continuous repayment term based on an agreed schedule and the purchase of the banks shareholding. For completed properties, a normal lease will be used, whereas for under-construction properties, a forward lease shall take place. The diagram below depicts the processes of MM.

MM can be financially engineered to have an amalgam of economic effects. It can be either financing or partnership equity participation, or both. In the books of most banks, MM is treated as financing where it is classified under musharakah financing and not truly recognised as investment. Hence, banks take the function of a pure financier without any underlying economic interest as an equity holder (partner).

From a fiqh viewpoint, emphasis should be given to the essence and objective (maqasid) of the transaction, not the words or the form (Ibn Qayyim Al-Jawziyya, famous Islamic jurist and scholar of the 14th century). Based on the principle of consistency for financial engineering devised by a modern Islamic finance specialist, Dr Sami Al-Suwailem, the form and substance of Islamic products must be consistent with each other. Nevertheless, the form of partnership here does not serve the substance of financing.

As an unequal playing field will be created, effect is given to the form over substance for public interest (maslahah) by taking into account extenuating circumstances (rukhsah). Here, an economic benefit shapes the legal landscape, and not vice versa. The financier may still take the role of equity partner in addition to financier depending on the variety of economic purpose and types of financing products.

Two agreements in one

Given the Shariah prohibition of the combination of two agreements in one transaction that are made conditional upon each other, it is still permissible for the contracting parties to combine the

two contracts of musharakah and ijara into one document as long as both were concluded separately and do not overlap.

In regard to the issue of refinancing in MM, it is akin to having a new partner in a new partnership in the same venture/asset, albeit with different value. The previous MM financing must be terminated for the new MM refinancing to take place; otherwise, there will be two contracts in one contract. Thus, there will be a discharge of charge by the originating bank, as part of the legal requirements in Malaysia.

Based on a sample MM refinancing agreement which involved a partial refinancing, the charge is on the entire property despite the partial refinancing not indicating the market price of the entire property. Rightfully, the charge should be on a slice of property being partially refinanced, and not the entire portion.

Ownership

As a partner in the ownership of the property, the financier shares the responsibility and risks arising from the said property. In an ijara relationship, the owner (lessor) has to bear the cost of basic and structural maintenance while the occupying party (customer/lessee) shall bear the routine and operational maintenance of the property. Nonetheless, since the customers ultimate objective of engaging in the transactions is to own an asset, and not merely to rent it for a certain period of time, it has been arguably accepted that the customer should bear all the costs, particularly when the customer is acknowledged as the sole legal owner in the document of title (except in the case of KFH where trust deed is used). The validity of MM may also be disputed in respect of the leasing of property by the partnership to one of its partners.

Perusal of a sample MM co-ownership agreement (a clause on payment of taxes and outgoings) indicates that the customer shall pay 100 per cent of the amount of all taxes due in relation to or associated with the property, notwithstanding the customer being the partial owner of the property until the end of the co-ownership.

This unequal bargain position is further aggravated by clauses relating to expenses in the form of stamp duty, whereby the customer shall pay all stamp, documentary and other similar duties and taxes to which the agreement or any related documents may be subject and shall fully indemnify the bank. These provisions are inserted in view of the customer having the exclusive right to occupy, possess, use and enjoy the property. While this complies with the letter of partnership, it is doubtful whether it serves its spirit.

While the general principle expounds that takaful of an asset is the responsibility of the owner, eminent Islamic scholar, Muhammad Taqi Usmani, stresses that it should be at the expense of the hirer. Some experts in Malaysia say that risks and liabilities that are not detrimental, which include insurance and maintenance, can be transferred to the hirer, according to academicians, Dr Tag El-Din and Dr N. Irwani Abdullah. The Shariah Legal Opinions of KFH affirmed that it is lawful to make the hirer responsible for a known amount of insurance as it may then become part of the lease payment (according to Shariah advisor and Islamic scholar, Yusuf Talal DeLorenzo).

In most legal documentations, the customer will have to solely maintain the takaful coverage of not less than the outstanding buyout amount or for such amount as may be acceptable to the bank. Worse still, the customer has to continuously assign all rights to the takaful proceeds to the bank. The customer is also encouraged to take up a Shariah-compliant mortgage reducingterm takaful. The indemnity clause in agreements may be tantamount to some form of guarantee or assurance by one partner for another.

Waad (unilateral promise)

An additional instrument of waad is usually entrenched in two forms. First, the customer undertakes to pay the monthly payment until the end of MM. Second, the customer irrevocably undertakes to purchase the banks share in the event of default. By virtue of the waad, the customer shall be obliged to acquire the banks ownership share in the property at the buyout amount when there are changes in circumstances resulting in illegality, even if it is not caused by the customer.

In contemporary juristic opinions, waad becomes legally binding if it is made conditional upon the fulfilment of an obligation and the promisee has already incurred expense on the basis of such a promise (Resolution no. 40-41 of Islamic Fiqh Academy). In the Malaysian context, the judicial precedents applying the Contracts Act 1950 have duly recognised promise and promissory estoppels as legally enforceable in the court of law.

Compensation and event of default

In terms of compensation (tawidh) for late payment, while some view penalties for late payment of rentals as not permissible (as stipulated by Ravil Hairetdinov, Mohammad Taqi Usmani and Meezan Bank), contemporary scholars have given concession provided that the amount recovered must be channelled to charity and not accounted for as income. The AAOIFI Shariah Rules for ijara and ijara muntahia bittamleek, issued in 2000, provided that the lessee shall undertake to donate a certain amount or percentage of rental due in the case where there is no good reason for late payment. There are slight divergences in the legal documentations, while a legal documentation explicitly requires such compensation to be donated to any registered

charitable organisation or utilised for any charitable purpose; the other documentation is silent in this regard.

According to Johan Lee, a legal practitioner, even in the case of non-indebtedness, the bank may exercise its rights as trustee to sell off the property and the proceeds/loss should be shared between the partners according to stated ratios. As a Shariah requirement, the redemption sum or formula has to be certain and fixed in advance. Hence, any reference to the market price at the point of redemption may trigger issues of riba. The timeframe to call on this option can be fixed or flexible. As redemption and failure to redeem are always the two common scenarios, the partners will be stuck with the business in the event that the redeeming party fail to do so. This explains why agreements are slanted in favour of banks over the redeeming party.

Ideally, the loss will be shared by the bank and customer according to the last ownership ratio if there is shortfall in the recovery of payment. Nevertheless, the extent of this sharing is doubted in reality. In most cases, the customer shall pay to the bank the difference between the amount due to the bank and the amount so realised Until payment of such differential amount, the customer shall pay late payment compensation charges on the differential sum until the date of actual payment made.

In the provisions on events of default, the customer shall be obligated to acquire the banks ownership share in the property at the buyout amount for matters such as developers winding up and property abandoned, which are not the fault of the customer. This resembles a conventional loan whereby the customer will continue to make payments if the property is destroyed until the insurance proceeds are received. This smells apologetic against the Islamic risk-reward principle.

One of the prominent legal issues faced by Islamic banks is on the sale of the property following an event of default by the customer. In the case of KFH, the security is by way of registering the property under KFHs name as trustee. In the absence of precedents and legal provisions governing this arrangement, customers may challenge the banks rights in court when the bank wishes to exercise its rights under the trust deed. Even the notion of trust here is a limited concept as a full blown version will impinge on the National Land Code (NLC).

The NLC does not provide for banks to be the co-partner with customers. Thus, the asset is charged to banks despite the banks theoretically being partners who have ownership shares in the asset. The raison dtre for this may be due to the unequal arms doctrine in terms of contractual rights and obligations where the bank would naturally have more financial muscle and undue influence.

Strictly, no security (via legal charge) can be arranged in MM transactions since it cannot have a guarantee attached to the financing (contribution of) principal according to the Shariah. It is understood that the Central Bank of Malaysias (Bank Negara Malaysia) Law Review Committee has reviewed this issue. However, amendment of relevant legislations has yet to see the light of day.

Conclusion

The structuring of MM documentations deserves circumspection to ascertain the validity of MM contracts in light of Shariah and legal requirements. It is not the permissibility of MM contracts per se, but their indiscreet use, faulty structuring and window dressing which are igniting the perception that MM is no different from BBA, or, worse still, conventional home-financing.

A holistic application of the Shariah, both ex-ante and ex-post, shall warrant Islamic banks to ensure the use of property is Shariah-compliant particularly in view of the inherent reputational risk in Islamic transactions and governance. As MM is theoretically deemed to be fairer than BBA, MM must truly reflect its maqasid al Shariah (objectives of Shariah).

Apart from reviewing statutes to accommodate Shariah-based principles, it is understood that the International Shariah Research Academy for Islamic Finance (ISRA) is reviewing the trustee corporation framework for trustee corporations to be the registered owner of the joint property as a resolution for ownership issues.

Given that the foregoing issues are not exhaustive, it is paramount to parameterise the validity and viability of MM. In the context of Shariah harmonisation and product innovation, BNM is developing the so-called Shariah parameters to provide a standard guidance on applying and operating the Shariah contracts in Islamic finance. This may minimise the possibility of Shariah arbitrage and may promote more consistent application of Islamic financial contracts, both locally and abroad. ISRA is also working on standardised contracts for Islamic home financing. As MM has not been tested in courts, it would be prudent to have such standards as an underlying philosophy for more standardised legal documents in the industry.