Banking Tawarruq and its Impact on Shariah Governance: A Contemporary Jurisprudential Study 10.35781/1637-000-118-004

Abstract

This study uses an analytical inductive approach and aims to uncover the meaning of banking tawarruq, starting from the traditional tawarruq mentioned in jurisprudential texts, and clarifying the difference between it and the sale of 'aynah mentioned in legal texts. The study elaborated on the ruling of traditional (individual) tawarruq and banking tawarruq by tracing the steps and mechanisms of work related to this type of contracts in banks and financing companies. The study also contributed to highlighting the impact of Sharia governance in many Islamic countries, especially in the Kingdom of Saudi Arabia, on financing contracts like banking tawarruq. The study concluded that there is a distinction between banking tawarruq and traditional individual tawarruq, and that the contemporary regulation of tawarruq contracts is not a sufficient reason for prohibition. Furthermore, the need for people to obtain money through tawarruq contracts, provided that these contracts comply with the conditions and controls that prevent falling into the prohibited sale of 'aynah, is a clear evidence supporting the permissibility of banking tawarruq. Additionally, it emphasizes the original principle in transactions, which is permissibility, as evidenced by the texts from the Quran and Sunnah. One of the most significant findings was that Sharia governance in banks and financing companies is an important step in regulating tawarruq contracts in particular and financing contracts in general according to Sharia controls, enabling Muslims to meet their cash needs while being assured of the permissibility of their financial transactions.