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Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing

Musharakah mutanaqisah (diminishing partnership) house financing (MMHF) is one type of house financing facilities that Islamic bank in Malaysia offers. It is a hybrid house financing product involving three recognized Shariah contracts that are musharakah (partnership), ijarah (leasing) and bay‘ (sa...

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Main Authors: Othman, Ahmad Azam, Hassan, Rusni, Omar, Muhammad Naim, Mokhtar, Norlizah
Format: Proceeding Paper
Language:English
Published: 2014
Subjects:
HG Finance
Online Access:http://irep.iium.edu.my/38559/2/IBMC_2014_ABSTRACT_SCHEDULE_AND_CERT.pdf
http://irep.iium.edu.my/38559/
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spelling my.iium.irep.385592024-03-15T03:53:47Z http://irep.iium.edu.my/38559/ Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing Othman, Ahmad Azam Hassan, Rusni Omar, Muhammad Naim Mokhtar, Norlizah HG Finance Musharakah mutanaqisah (diminishing partnership) house financing (MMHF) is one type of house financing facilities that Islamic bank in Malaysia offers. It is a hybrid house financing product involving three recognized Shariah contracts that are musharakah (partnership), ijarah (leasing) and bay‘ (sale). Its modus operandi starts with the bank and the customer jointly purchase a particular house with an agreed ratio of contribution such as 90:10. The customer then leases the bank’s portion and at the same time purchases the bank’s portion progressively through monthly payment that consists of the monthly rental payment and purchase price. This results the bank’s ownership becomes diminished and the whole ownership of the house belongs to the customer at the end of the financing period. The issue is what happens when the customer defaults his monthly payment to the bank. Thus, this paper aims to investigate the remedies available to the bank upon default of the monthly payment by the customer. This is done by analyzing the MMHF agreement entered into between the bank and the customer. The findings from the analysis show that there are various available remedies to the bank due to default of monthly payment by the customer. The remedies include outstanding arrears payment, remaining acquisition payment, purchase of bank’s shares, purchase of customer’s shares and collateral right enforcement through sale. 2014 Proceeding Paper PeerReviewed application/pdf en http://irep.iium.edu.my/38559/2/IBMC_2014_ABSTRACT_SCHEDULE_AND_CERT.pdf Othman, Ahmad Azam and Hassan, Rusni and Omar, Muhammad Naim and Mokhtar, Norlizah (2014) Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing. In: Islamic Business Management Conference (IBMC 2014), 18-19 August 2014, Putra World Trade Centre.
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Othman, Ahmad Azam
Hassan, Rusni
Omar, Muhammad Naim
Mokhtar, Norlizah
Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing
description Musharakah mutanaqisah (diminishing partnership) house financing (MMHF) is one type of house financing facilities that Islamic bank in Malaysia offers. It is a hybrid house financing product involving three recognized Shariah contracts that are musharakah (partnership), ijarah (leasing) and bay‘ (sale). Its modus operandi starts with the bank and the customer jointly purchase a particular house with an agreed ratio of contribution such as 90:10. The customer then leases the bank’s portion and at the same time purchases the bank’s portion progressively through monthly payment that consists of the monthly rental payment and purchase price. This results the bank’s ownership becomes diminished and the whole ownership of the house belongs to the customer at the end of the financing period. The issue is what happens when the customer defaults his monthly payment to the bank. Thus, this paper aims to investigate the remedies available to the bank upon default of the monthly payment by the customer. This is done by analyzing the MMHF agreement entered into between the bank and the customer. The findings from the analysis show that there are various available remedies to the bank due to default of monthly payment by the customer. The remedies include outstanding arrears payment, remaining acquisition payment, purchase of bank’s shares, purchase of customer’s shares and collateral right enforcement through sale.
format Proceeding Paper
author Othman, Ahmad Azam
Hassan, Rusni
Omar, Muhammad Naim
Mokhtar, Norlizah
author_facet Othman, Ahmad Azam
Hassan, Rusni
Omar, Muhammad Naim
Mokhtar, Norlizah
author_sort Othman, Ahmad Azam
title Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing
title_short Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing
title_full Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing
title_fullStr Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing
title_full_unstemmed Remedies available to Malaysian Islamic banks upon default of monthly payment by the customer in Musharakah Mutanaqisah (diminishing partnership) house financing
title_sort remedies available to malaysian islamic banks upon default of monthly payment by the customer in musharakah mutanaqisah (diminishing partnership) house financing
publishDate 2014
url http://irep.iium.edu.my/38559/2/IBMC_2014_ABSTRACT_SCHEDULE_AND_CERT.pdf
http://irep.iium.edu.my/38559/
_version_ 1794544773962399744
score 13.211869

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