RESOLUTION N 101 (4/11)
DEBT SALE AND LOAN DEBENTURES
AND THEIR ISLAMIC SUBSTITUTES
IN PUBLIC AND PRIVATE SECTORS
Compiled By:
Prof. Dr. Mohd. Ma’sum Billah
masum2001@yahoo.com
masum@applied-islamicfinance.com
+6019-3699542

Quote - The Council of the Islamic Fiqh Academy, emanating from the
Organization of the Islamic Conference, in its 11th session held in Manama,
Bahrain, on 25-30 Rajab 1419H(14-19 November 1998),

Having examined the research papers presented to the Academy in connection
with the issue of "Debt sale and loan debentures and their Islamic
substitutes in public and private sectors", and in the light of the
discussions which drew the attention of the participants to the fact that
this issue is one of the critical issues in the area of modern Islamic
transactions,
RESOLVES:

First:  It is not permissible to sell a deferred debt by the non-debtor for
a prompt cash, from its type or otherwise, because this results in Riba
(usury). Likewise, it is not permissible to sell it for a deferred cash,
from its type or otherwise, because it is similar to the sale of a debt for
a debt, which is prohibited in Islam. There is no difference whether the
debt is the result of a loan or whether it is a deferred sale.
Second:Emphasizing the Academy's Resolution no 60/11/6, in respect of
bonds, issued during its Sixth Conference held in Saudi Arabia on 17-23
Shebang 1410 (14-20 March 1990) and on Paragraph 3 of the Academy's
Resolution no. 64/2/7 in respect of discounting commercial papers, carried
during its Seventh Conference held in Saudi Arabia on 7-12 Dhul Qi'da 1412H
(9-14 May 1992).
Third:The Academy reviewed other forms of the debt sale, and thought it
better to postpone taking decisions thereupon in order to conduct further
research. It also requested the General Secretariat to form a committee
entrusted with the task of studying such forms and suggest alternatives
which are acceptable by Islam for the debt sale so that they can be
proposed again to the Academy during a coming session.

May Allah's prayers and blessings be upon our Prophet,
and upon his family and Companions – Unquote

(Source: "Resolution and Recommendations of the Council of the Islamic Fiqh Academy (1985-2000)” , IRTI.)