Islamic Contract – Bay’ al-Murābahah: Comparison Between AAOIFI and BNM Requirements for Murābahah

​Islamic Contract – Bay’ al-Murābahah: Comparison Between AAOIFI and BNM Requirements for Murābahah
Q1: What is the difference between AAOIFI and BNM regarding the appointment of the purchase orderer as an agent?
Answer:
AAOIFI and Bank Negara Malaysia (BNM) differ in their approach regarding whether the purchase orderer may act as an agent to purchase the murābahah asset.
AAOIFI Standard (Shariah Standard No. 8)
According to AAOIFI:

• appointing the purchase orderer as an agent to purchase the murābahah asset is generally not allowed;
• it is only permitted in cases of dire need.

This position is stated in:
AAOIFI Shariah Standard No. 8, Paragraph 3/1/3.
AAOIFI adopts a stricter approach to prevent:

• legal manipulation (hīlah);
• fictitious transactions; and
• situations where ownership transfer may not genuinely occur.

Bank Negara Malaysia (BNM) Policy Document on Murābahah
According to BNM:

• the purchase orderer may be appointed as an agent to purchase the murābahah asset;
• however, the agency appointment and murābahah contract must not be combined in the same document.

This position is stated in:
BNM Policy Document on Murābahah, Paragraphs 16.1–16.2.
BNM allows this structure to facilitate practical Islamic banking operations while still maintaining:

• separation between agency and sale contracts; and
• proper ownership transfer procedures.

Comparison Notes: AAOIFI vs BNM on Agency Appointment
AAOIFI Position

• Generally prohibits appointing the purchase orderer as agent.
• Permits it only in exceptional or necessary circumstances.
• Adopts a stricter Shariah governance approach.
• Concerned about fictitious ownership and legal stratagems.

BNM Position

• Allows the purchase orderer to act as agent.
• Requires agency agreement and murābahah contract to be separate documents.
• Focuses on operational practicality in Islamic finance.
• Ensures procedural safeguards to preserve Shariah compliance.

Case Study: Appointment of Customer as Purchasing Agent
A customer wishes to purchase industrial equipment through murābahah financing from an Islamic bank.
Instead of the bank directly purchasing the equipment:

• the bank appoints the customer as its agent to purchase the equipment from the supplier;
• after the purchase is completed on behalf of the bank, the bank then sells the equipment to the customer through a murābahah contract.

Under AAOIFI

• This arrangement is generally discouraged unless there is genuine necessity.
• AAOIFI fears the arrangement may merely simulate ownership transfer without actual possession by the bank.

Under BNM

• The arrangement is permissible.
• However:
  • the agency appointment document must be separate from the murābahah sale contract; and
  • the bank must still ensure proper ownership and risk transfer before resale.

Analysis
The difference reflects:

• AAOIFI’s stricter precautionary approach; and
• BNM’s more practical regulatory approach tailored to modern Islamic banking operations.