BAY AL-DAYN

Al-dayn is the Arabic word for debt as

opposed to qard (loan).
Technically dayn is defined as mal
hukmi fi al-zimmah or a constructive
asset in the obligation of the debtor.
Therefore, dayn is a form of mal (asset) or
haqq mali (a financial right).
Basically, bay al-dayn (sale of debt) is a
transaction that conforms to Shari'ah under
current Malaysia regulation which regards
the sale and purchase of securities or debt
certificates.

Regarding the definition of bay al-dayn,

Muslim jurists have defined bay al-dayn as a
kind of sale contract where the creditors
payable right upon the debtor is being sold
either to the debtor himself or to a third party.
Bay al-dayn is also known as debt purchasing
in Islamic banks because the bank normally
purchases the customers right to the debt and
securitized it as bills of exchange known as
Accepted Bills-i.
The bank purchases the debt from the
customer at a discount price which is agreed
among both parties. The bank can sell the
debt to a third party also at a discount price

Contrary to ayn, dayn is considered as

intangible asset
Hence, dayn is considered as right of
the creditor established in the
liability of the debtor
Even though it is considered as property
of value (mal mutaqawwam), but the
jurists differ in their recognition of its
independency in becoming object of sale

Legal Ruling Regarding

Bay Al-dayn
1) Selling of debt to the debtor
Majority of jurists uphold that it is permissible,
except that of the Zahiris who maintained that the
sale of debt is disallowed even to the debtor
himself
2) Selling Of Debt To Third Party
Majority of jurists disallowed it.
Some allow it with certain condition
- Some Shafies (al-Subki, al-Nawawi, etc) with a
few conditions
- Some Shafies only confirmed debt
- Some Malikis 8 conditions (in the textbook)
Ibn al-Qayyim allowed
Islamic Fiqh Academy allowed to a debtor or
to a third party provided that the rules of
riba and gharar are observed.

3.

The selling of debt at discount under

the concept of Dha wa Taajjal
Dha wa Taajjal in general refers to the act of
debt discounting and early payment
Majority of jurist disallowed
Ibn Abbas allowed based on rafah and takhfif
(lifting the burden)

Application of Bay al-dayn

in the Islamic Banks

It is applied mostly in the securitization

based products such as in;
a. Islamic

Money Market Instruments

b. Islamic Treasury Bills
c. Islamic Negotiable Instruments
d. Islamic Accepted Bills
e. Export Credit Refinancing
f. Islamic Bonds (Sukuk)

Opinion of Jurists

The OIC Fiqh Academy and some

shariah scholars have the opinion that
the sale/purchase of securities or
documents representing debt at a price
other
than
their
face
value
contradicts the principle of Islam.

However, the Muslim jurists at the SAC

of the Malaysian Securities Commission
have ruled that the practice of debts
sold to a third party and selling the
debt at a discount price is
permissible.

THANK YOU