Podcast
Questions and Answers
What is the mechanism of Tawarruq?
What is the mechanism of Tawarruq?
- The Islamic bank directly sells the asset to the customer through a Murabaha contract and then the customer sells the asset to a third-party purchaser.
- The customer directly purchases an asset from the seller and then sells it to the Islamic bank for a deferred price.
- The customer requests cash from the Islamic bank and then purchases an asset from a seller.
- The Islamic bank purchases an asset from the seller, delivers it to the customer, and then sells the asset to the customer through a Murabaha contract. (correct)
Why should the commodity sold in Tawarruq be well-identified?
Why should the commodity sold in Tawarruq be well-identified?
- To avoid 'Inah which is strictly prohibited in Islam.
- To prevent conventional banks from benefiting from the transaction.
- To ensure that it is distinct from other assets of the seller. (correct)
- To comply with Shariah principles of the Murabaha contract.
What is the purpose of Tawarruq?
What is the purpose of Tawarruq?
- To obtain cash by selling an asset to a third-party purchaser for a spot price. (correct)
- To allow conventional banks to benefit from interest-based lending.
- To ensure compliance with Shariah principles of finance.
- To facilitate deferred payments between customers and sellers.
Why should Islamic banks not perform Tawarruq for the benefit of conventional banks?
Why should Islamic banks not perform Tawarruq for the benefit of conventional banks?
Who should the commodity be sold to in Tawarruq to avoid 'Inah?
Who should the commodity be sold to in Tawarruq to avoid 'Inah?
In the process of Tawarruq, what is the purpose of the Islamic bank purchasing an asset from the seller instead of financing in cash?
In the process of Tawarruq, what is the purpose of the Islamic bank purchasing an asset from the seller instead of financing in cash?
What is the significance of selling the commodity in Tawarruq to a party other than the one from whom it was purchased on a deferred payment basis?
What is the significance of selling the commodity in Tawarruq to a party other than the one from whom it was purchased on a deferred payment basis?
What is the underlying principle behind Islamic banks not performing Tawarruq for the benefit of conventional banks when it discovers their use of liquidity for interest-based lending?
What is the underlying principle behind Islamic banks not performing Tawarruq for the benefit of conventional banks when it discovers their use of liquidity for interest-based lending?
Why should the commodity sold in Tawarruq be well-identified and distinct from other assets of the seller?
Why should the commodity sold in Tawarruq be well-identified and distinct from other assets of the seller?
What is the mechanism behind fulfilling the customer's need for liquid cash through Tawarruq?
What is the mechanism behind fulfilling the customer's need for liquid cash through Tawarruq?
True or false: Tawarruq involves purchasing a commodity for a deferred price and selling it to a third party for a spot price to obtain cash
True or false: Tawarruq involves purchasing a commodity for a deferred price and selling it to a third party for a spot price to obtain cash
True or false: Islamic banks should not perform Tawarruq for the benefit of conventional banks if they discover that such banks are going to use the liquidity for interest-based lending
True or false: Islamic banks should not perform Tawarruq for the benefit of conventional banks if they discover that such banks are going to use the liquidity for interest-based lending
True or false: The commodity sold in Tawarruq must be well-identified and distinct from other assets of the seller
True or false: The commodity sold in Tawarruq must be well-identified and distinct from other assets of the seller
True or false: Tawarruq involves selling the commodity to a party other than the one from whom it was purchased on a deferred payment basis to avoid 'Inah
True or false: Tawarruq involves selling the commodity to a party other than the one from whom it was purchased on a deferred payment basis to avoid 'Inah
True or false: The mechanism of Tawarruq involves the customer selling the asset to a third-party purchaser after getting ownership from the Islamic bank to fulfill the need for liquid cash
True or false: The mechanism of Tawarruq involves the customer selling the asset to a third-party purchaser after getting ownership from the Islamic bank to fulfill the need for liquid cash
