Scope of Hybrid Contract in Islamic Finance

A Research Proposal
On
Scope of Hybrid Contracts in Islamic Finance: Pakistan Perspective
1
Introduction
Generally, Hybrid contract is the consolidation of at least two agreements in a single

contract. The act of Islamic banking in Pakistan is more utilization of the single agreement in
the assembling of its items, while items that solitary utilize single agreement practically
speaking is viewed as less address the issues of exchanges that happen, particularly as of
now when ABIF has begun running sharia banking-Pakistan should have the option to
contend with other ASEAN country banks. Sharia banking is needed to have the option to
enhance in the assembling of items, one of them is by utilizing a crossover contract so it can
pull in revenue and address the issues of public exchanges.
Notwithstanding, half breed contract is a dubious issue in Islamic account as a result of the
hadith that restricts "two agreements in a single exchange" (Mālik, Muwatta', Vol. 2, No.
663, ed. 2005). Some unacceptable understanding of the hadith may conceivably overcome
any endeavor to permit combination of agreements in Islamic money paying little mind to
the nature and the element of the agreement joined and ruin the item improvement in
Islamic banking. All things considered, from Shariah the exchange may include more than
one agreement and it is legitimate given the mix needs to follow the Shariah rules and
boundaries (Arbouna, 2007). Mingka (2011) explained that there are numerous kinds of
mixture contract in Islamic banking and money, for example, bayc wafa'(the mix of offer
agreement with the guarantee to buy back) and the most conspicuous agreement that are
presently utilized in Islamic banking especially for home financing which is mushārakah
mutanāqishah. This agreement comprise of a few agreements in a single exchange like the
agreement of joint proprietorship (syirkah al-milk), the agreement of offer (bayc), the
agreement of ijārah (rent), the agreement of hibah (award, etc. Thus, in this examination I
will discover and investigate those cross breed contracts which can be applied in Pakistan.
Objectives
Key Objectives of this study are:
 To illustrate detailed understanding of the concept and application over the

prohibited hybrid contracts in Shariah.
2
 To investigate how hybrid contracts might be applied for the purpose of product
development in Islamic banking and finance in Pakistan.
 To analyze the validity of the use of Hybrid contracts in the innovation of Sharia
banking products in order to encounter ABIF including its legal consequences under
the prevailing laws and regulations in Pakistan.
Importance of the Study
Islamic banking and Finance will be benefitted by the Shariah boundaries and rules that set
down in this paper earlier organizing the agreement on the items. So as the organized
agreement isn't repudiate with the hadith that restricts the blend of agreements.
Research Questions
To complete this Research Paper I have to seek answers for the following research
questions:
 What is Hybrid Contract in light of Shariah and how this can be applied in real world?
 Whether hybrid contracts can be applied for the purpose of product development in
Islamic banking and finance in Pakistan or not? If yes, how?
 Are these Hybrid Contracts valid according to ABIF Guidelines? Is there any legal
consequences?
Methodology
To complete this Research Paper, methodology will be comprised of 3 following parts:
(i) Data Source:
As this research will be based on analytical descriptive approach, primary Data to complete
this research will be different hybrid contracts available and practiced all over the world.
Secondary data will be fiqh issues and legal issues of Pakistan for hybrid contracts.
(ii) Key Variables:
Hybrid contracts, Fiqh Issues, ABFI Guidelines etc.
(iii) Analytical Approach
3
As this research will be based on analytical descriptive approach, after collecting data
analysis will be done using hypothecal value for finding and innovating new hybrid contracts
feasible for Pakistan. Content analysis will be done. An attempt will be done to use
Hypothesis Testing.
Limitations
In conducting this Research I will face the following constraints:
 Unavailability of work on this topic in Pakistan

 Some Fiqh (Islamic Laws) constraints.
 Lack of Interviews of Islamic Scholars
Structure of the Research
This Research Paper will have 6 chapters. First chapter will be on Introduction and
Background of the study. It will also contain objectives, Research Questions, Limitations etc.
Chapter 2 will focus on Literature Review highlighting previous works summary on this topic.
Chapter 3 will illustrate Research Methodology pinpointing Data Source, Key Variables and
Analytical Approach. Chapter 4 will narrate key analysis and findings. Chapter 5 will
enumerate Policy Recommendations and Chapter 6 will highlight conclusion.
List of References
Arbouna, M.B. (2007). “The Combination of Contracts in Sharia: A Possible Mechanism
for Product Development in Islamic Banking and Finance”, Thunderbird
International Business Review, 49 (3): 341-369.
AAOIFI. (2007; 2008). Shariah Standards for Islamic Financial Institutions. Shariah Standard
No. (25): Combination of
Contracts. (Bahrain: AAOIFI).
AAOIFI. (2007; 2008). Shariah Standards for Islamic Financial Institutions. Shariah Standard
No. (30): Monetization
(Tawarruq). (Bahrain: AAOIFI).
4
Abu Ghuddah, ‘Abdu al-Sattār. (2000). Al-Tafāhum al-Jānibī ‘ala Ta’addud al-‘Uqūd Dūna
Ishtirāt ‘Aqd fī ‘Aqd. Paper
presented at Al-Barakah’s 18th Forum on Islamic Economics, Damascus, Syria.
Ahmad, Taris et al. (2010). Islamic Banking and Finance: What It Is and What It Should Be,
UK: 1st Etichal Charitable
Trust.
Al-‘Asqalāni, Ibn Hajar. (2007). Fathul Bāri Syarh Sahih al-Bukhari. Beirut: Dār Ma’rifah.
Al-Bakī, Al-Shaikh Zuhair. (1995). Fiqh al-Mu’āmalāt li al-Imām Shaikh al-Islām Ahmad Ibn
Taymiyyah. Beirut: Dar al-
Fikr al-‘Arabī.
Al-Bassam, Abd Allah ibn Abd al-Rahman ibn Saleh. (1997). Taysīr al-‘Allām Sharh Umdat al-
Ahkām. Beirut: Dar al Fikr.
Al-Buhuti, Mansyur ibn Yunus ibn Idris. (1997). Kasshaf al-Qina’ ’an Matni al-Iqna’. Vol. 3,
Beirut: Dār al-Fikr.
Al-Dardir, Abu Barakat Ahmad. (1974). Al-Sharh al-Kabīr ‘ala al-Maqna’, Vol. 12. Beirut: Dār
al-Fikr.
Alhadad, Ahmad bin Abdul Aziz. (2003). “Tawarruq, Its Essence And Its Types: Mainstream
Tawarruq And Organized
Tawarruq”. Retrieved September 20, 2013. http://www.kantakji.com/fiqh/Files/Markets/a

%20(66).pdf.
Al-'Imrāni, Abdullah ibn Muhammad ibn Abdullah. (2006). Al-' uqūd al-Māliyah al-
Murakkabah: Dirāsah Fiqhiyyah
Ta’shiliyyah wa Tathbiqiyyah, Vol. 1. Riyadh: Dār Kunuz Eshbelia li al-Nasyr wa al-Tauzi’.
Al-Nawawy, Abi Zakariya Yahya bin Syaraf. (1996). Raudhat al-Thalibin, Vol. 3, Beirut: Dar al-
Kutub al-‘Ilmiyyah, 1st
edition.
5
Al-San’āni, Muhammad ibn Isma’īl ibn Shalah al-Amir al-Kahlani. (1960). Subul al Salam
Sharh Bulūgh al-Marām, 4th
Edition. Cairo: Mustafā al-Bābi al-Halabī.
Al-Shātibi, Imam Abi Ishaq. (2003/1424H). al-Muwāfaqāt fi ushul al-sharī’ah, Vol. 1. Beirut:
Dār al-Kutub al-‘Ilmiyyah.
Handayani, T., and Abubakar, L. (2016). “Implikasi Kesepakatan ASEAN Banking
Integration Framework (ABIF) Terhadap Pembaruan Hukum Perbankan
Indonesia”. Rechtidee, 11 (2): 136-149
Isfandiar, A.A. (2013). “Analisis Fiqh Muamalah Tentang Hybrid Contract Model dan
Penerapannya Pada Lembaga Keuangan Syariah”, Jurnal Penelitian, 10 (2): 213.
Mingka, Agustianto. (2011). Hybrid Contract Dalam Keuangan Syariah. Retrieved August 12,
2012.
www.agustiantocentre.com.
Noor, Azman Mohd. and Farhah, Nur. (n.d.). A Review Of Commodity Murābahah
Transaction As Offered By Bursa
Malaysia; A Critical Analysis From Fiqh Perspective.
Rosly, S. A. and Sanusi, M. (1999). The Application of Bay’ al-‘Inah and Bay’ al-Dayn in
Malaysian Islamic Bonds: An
Islamic Analaysis, International Journal of Financial Services Vol. 1, No. 2.
Rosly, S. A. and Sanusi M. (2001). Some Issues of Bay’ al-‘Inah in Malaysian Islamic Financial
Market. Arab Law
Quarterly: Kluwer Law International Netherland.
Shaharuddin, Amir. (2009). The Bay' al-Inah Controversy in Malaysian Islamic Banking.
Retrieved June 13, 2012.
http://www.kantakji.com/fiqh/Files/Markets/p118.pdf.

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A Research Proposal

Scope of Hybrid Contracts in Islamic Finance: Pakistan Perspective

Generally, Hybrid contract is the consolidation of at least two agreements in a single

Key Objectives of this study are:

 To illustrate detailed understanding of the concept and application over the

Importance of the Study

To complete this Research Paper, methodology will be comprised of 3 following parts:

(i) Data Source:

(ii) Key Variables:

Hybrid contracts, Fiqh Issues, ABFI Guidelines etc.

(iii) Analytical Approach

In conducting this Research I will face the following constraints:

 Unavailability of work on this topic in Pakistan

Structure of the Research

Arbouna, M.B. (2007). “The Combination of Contracts in Sharia: A Possible Mechanism

for Product Development in Islamic Banking and Finance”, Thunderbird

International Business Review, 49 (3): 341-369.

Contracts. (Bahrain: AAOIFI).

(Tawarruq). (Bahrain: AAOIFI).

presented at Al-Barakah’s 18th Forum on Islamic Economics, Damascus, Syria.

Tawarruq”. Retrieved September 20, 2013. http://www.kantakji.com/fiqh/Files/Markets/a

Ta’shiliyyah wa Tathbiqiyyah, Vol. 1. Riyadh: Dār Kunuz Eshbelia li al-Nasyr wa al-Tauzi’.

Edition. Cairo: Mustafā al-Bābi al-Halabī.

Handayani, T., and Abubakar, L. (2016). “Implikasi Kesepakatan ASEAN Banking

Integration Framework (ABIF) Terhadap Pembaruan Hukum Perbankan

Indonesia”. Rechtidee, 11 (2): 136-149

Penerapannya Pada Lembaga Keuangan Syariah”, Jurnal Penelitian, 10 (2): 213.

Malaysia; A Critical Analysis From Fiqh Perspective.

Islamic Analaysis, International Journal of Financial Services Vol. 1, No. 2.

Quarterly: Kluwer Law International Netherland.

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