Tawarruq

TAWARRUQ: ISSUE & CHALLENGE

By:

Shochrul Rohmatul Ajija, Hamidah    , Siti Aisyah, Mia Fathia, and Nurul Annisa

ABSTRACT

Commodity tawarruq financing has been the most widely used form of liquidity management instrument to date, due to its ease of execution and wide acceptability among IFIs and banks. In recent years, however, some of the IFIs have been reluctant to use commodity tawarruq instruments due to their disapproval of the concept of tawarruq. Therefore, analysis about tawarruq is very essential and many studies have been done on it. Nevertheless, study about the comprehensive review of tawarruq according to scholar’s view and analysis of tawarruq in practice is limited and this paper attempt to fill this gap. Using literature analysis, this paper attempts to provide the views and verdicts of jurist regarding tawarruq in the banking system. Furthermore, it will also critically provide their textual evidence and rational arguments in order to reach a final juristic judgment.    

Key words: Tawarruq, Scholar’s View