Bay’ al-Dayn

BAY’ AL-DAYN

 Al-dayn  is the Arabic word for debt as opposed to qard (loan).  Technically dayn  is dened as “ mal hukmi f al-zimmah” or “a constructive asset in the obligation of the debtor.”   Therefore, dayn is a form of mal  (asset) or haqq ali (a nancial right).  !asically, bay" al#dayn (sale of debt) is a transaction that confors to Shari'ah under current $alaysia regulation which regards the sale and purchase of securities or debt certicates. 

%egarding the denition of bay’ al-dayn, $usli &urists have dened bay’ al-dayn  as a 'ind of sale contract where the creditor"s payable right upon the debtor is being sold either to the debtor hiself or to a third party.  Bay’ al-dayn is also 'nown as debt purchasing in slaic ban's because the ban' norally purchases the custoer"s right to the debt and securitied it as bills of e*change 'nown as Accepted !ills#i.   The ban' purchases the debt fro the custoer at a discount price which is agreed aong both parties. The ban' can sell the debt to a third party also at a discount price 

+ontrary to ayn, dayn is considered as intangible asset  -ence, dayn is considered as right of the creditor established in the liability of the debtor  ven though it is considered as property of value (mal mutaqawwam), but the  &urists di/er in their recognition of its independency in becoing ob&ect of sale 

Legal Ruling Regarding Bay’ Al-dayn 1) Selling of debt to the debtor  $a&ority of &urists uphold that it is perissible, e*cept that of the 0ahiris who aintained that the sale of debt is disallowed even to the debtor hiself  2) Selling Of Debt To Third Party  $a&ority of &urists disallowed it.  1oe allow it with certain condition # 1oe 1haes (al-Subki, al-Nawawi, et c) with a few conditions # 1oe 1haes – only conred debt # 1oe $ali'is – 2 conditions (in the te*tboo')  bn al#3ayyi – allowed  slaic 4iqh Acadey – alloed to a debtor or to a third party pro!ided that the rules of riba and gharar are obser!ed" ’

#"

The selling of debt at discount under the concept of Dha$ a Ta$a%%al

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5ha" wa Ta"a&&al in general refers to the act of debt discounting and early payent

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$a&ority of &urist 6 disallowed

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bn Abbas 6 allowed based on ra’ah and takhf  (lifting the burden)

&pplication of Bay’ al-dayn in the 'slamic (ans 

t is applied ostly in the securitiation based products such as in7 a. slaic

$oney $ar'et nstruents b. slaic Treasury !ills c. slaic 8egotiable nstruents d. slaic Accepted !ills e. *port +redit %enancing f. slaic !onds (1u'u')

Opinion of *urists  The 9+ 4iqh Acadey and soe shariah scholars have the opinion that the sale:purchase of securities or docuents representing debt at a price other than their face !alue contradicts the principle of 'slam .

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-owever, the $usli &urists at the S&+ of the $alaysian 1ecurities +oission have ruled that the practice of debts sold to a third party and selling the debt at a discount price is permissible.

 T-A8;