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Transfer of ownership in islamic banking – as in Murabaha and Diminishing Musharakah types of contract

Subject and Keywords:

ownership   Murabaha   Diminishing Musharaka   transfer   Islamic banking   bai’   shirka   property


The key to understanding legal issues in Islamic banking is to be aware of the religion entwined with business and observing the principles of Islam. As mentioned at the beginning of article, the theory of property law in Islam has not been codified or defined as such. As the main source of all property is divine the most crucial and primary sources of law are to be found in the Qu’ran. One must remember that property here cannot and should not be construed in the western understanding of it. Even private property is not absolute and limited. However, it is permitted and practiced to transfer the ownership as in other legal systems. The main aspects of such transactions are that they observe the sharia. Hence, the limitations to the transfer. As stipulated herein for transfer of the property the instruments of Murabaha and Diminishing Musharakah are applied. One of them transfers the property on the grounds of sale, the other on the grounds of a partnership. In both of them the final goal is the transfer of the ownership of the property to a client/buyer. The difference between the Islamic banking instruments and the western ones is, apart from the sharia issue, a level of complication of the transaction. As mentioned herein, both in Muarabaha and Diminishing Musharakah several agreements must be entered into. That can hinder the popularity of these instruments as well as unfriendly tax systems (that for instance, do not provide the release from double taxation of the double sale transactions). However, one must bear in mind that that the purpose of these transaction is to purchase a commodity in compliance with sharia and for the general benefit for the society

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Wydział Prawa, Administracji i Ekonomii Uniwersytetu Wrocławskiego   Wydawnictwo Beta-Druk


Sadowski, Mirosław (1964- ). Red.   Spychalska, Aleksandra. Red.   Sadowa, Katarzyna. Red.

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ISSN 2080-332X   ISBN 978-83-65158-08-6


pol   eng

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