Shariah Ruling of Bill Discounting and its Alternative
April 28th, 2020
By Uzair Ashraf Usmani
With the growing use
of financial services in international trade, the importance of bill
discounting is not beyond comprehension. It is undoubtedly one of the most
important tools of trade financing. Now, it has become very easy for importers
and exporters to sale any product to a complete stranger anywhere in the world
and get the bill against it discounted before its maturity date. That is why;
this tool is in the practice of all conventional banks. But, regarding Shariah
rulings, the prevailing practice in conventional banks is not Shariah compliant
as this transaction consists of debt sale and interest. But, due to its vital
need, Islamic Shariah jurists have stepped forward with its different
alternatives based on Murabaha, Wakalah, Musharkah and Bai Salam in currency.
In this article, we have covered the rationale behind the Shariah rulings of
prevailing bill discounting in conventional banks and addressed the Bai Salam
as an alternative in currencies and its executive model in Islamic banks.
Furthermore, we have discussed the different opinions of modern scholars
regarding these issues.