Musharakah Mutanaqisah Analysis

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Despite of most of the Islamic jurists agreed upon the permissibility of Musharakah Mutanaqisah, there are some scholars who hold different opinions. The majority of scholars believes that it is permissible and shariah compliant. As stated in the Qur‟an: “If the man or woman whose inheritance is in question, has left neither ascendants nor descendants, but has left a brother or a sister, Each one of the two gets a sixth; but if more than two, they share in a third; after payment of legacies and debts; so that no loss is caused (to any one). Thus, it is ordained by Allah. Allah is All-knowing, Most Forbearing.” (Surah al-Nisa‟ 4: 12). In this verse, Allah (s.w.t.) describes the partnership of property. If a person dies without leaving behind any ascendants or descendants, but he has brothers and sisters more than two in number, then they will share a third of…show more content…
Both the financier and the client share the profit and loss of the business together. Thus, the argument that said Musharakah Mutanaqisah is similar to interest based loan is not found. Furthermore, the International Fiqh Academy of OIC in its 15th session made resolution that Musharakah Mutanaqisah is a valid contract in the Shariah. Additionally, the Shariah Advisory Council of Bank Negara Malaysia in its 56th issued a fatwa that Islamic financing product structured based on Musharakah Mutanaqisah contract is permissible in light ofhe fact that Musharakah Mutanaqisah is a recognized contract in Islamic muamalat. Accordingly, we could draw coclusion that Musharakah Mutanaqisah is a permitted contract in Islamic Shariah. Notwithstanding, scholars has proposed a few principles and guidelines that are needed to be observed strictly, so that this contract does not surpass the limit of the Shariah and does not get assimilated with the interest based

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