Revisiting the scope of hybrid

contracts in Islamic finance

Presented By: Muhammad Asim Mushtaq (L19-1617)

Supervisor: Dr. Zafar Iqbal
Agenda / Outlines
■ Introduction
■ Research Questions
■ Rationale of the Study
■ Objective of the Study
■ Scope & Significance of the Study
■ Research Gap
■ Research Methodology
■ Results and Findings
■ Recommendations
■ Limitations
 Introduction

 Evolving Industry of Islamic Banking & Finance

 New Product Development Conditioned with the Shariah Compliance of

Hybrid Contracts

 Reasons of Slow Growth

 Role of early Fuqha, Scholars ( Rigidity of Views)

 Complexity associated with Combination of Contracts

 Introduction (II)

 Significance of Combination of Contracts

 Fundamental Conditions of Contract & Hybrid Contracts

 Dichotomy of Opinion of Fuqha

 Problem Statement

 Slow Growth of Islamic Banking & Finance

 Increasing Pressure for Product Development & Innovation

 Role of Hadiths pertaining to Contracts

 Objectives of Study

 Analyzing Hybrid Contract from various Fiqhi perspectives

 Investigating the difference of Opinion

 Hybrid Contracts With respect to

a) Quran & Hadith, b) Maqasid-e-Shariah, c) Religio-Rational Perspective

 Role of Hybrid Contracts in Product Development in Modern World

 Hybrid Contracts and Contemporary Scholars

 Significance of Study

 Intense Competition & need for New Products

 Innovation rather Islamization of Conventional Banking

 Hybrid Contract and Competitive Advantage through Innovation

 Current Volume of IBF & Future Growth trends

 Research Questions

 Intense Hybrid Contracts in the Light of Shariah

 Contradiction of Opinion of Jurists

 Hybrid Contracts & Fundamental Sources of Shariah

 Research Gap

 In Islamic banking product development is always based on combination of

contracts. The persistently prevalent dichotomy of opinions provides ample
group for further research to determine the legitimacy of resultant products
 Literature Review

 What is Combination of Contract?

 Western concept of contract vs Islamic concept of contract

 Literature Review (II)

 Prohibiting Elements of Contract

 Riba in Quran & Hadith

 Types of Contracts in Shariah

 Concept of Hybrid/Multi contract/Combination of Contract

 Significance of Hybrid Contracts for Product Development

 Literature Review (III)

 IBF products based on Hybrid Contracts

 Practical Implication of Hybrid Contracts

 Critical Evaluation of Hybrid Contracts w.r.t. Shariah & Fiqha

 Concept of Hilah & Hybrid Contracts

 Hybrid Contracts & Contemporary Fuqha

 Literature Review (IV)

 Fallacies in IBF products development

 Theoretical Framework

a) Parameters of AAOIFI

b) Parameters of Kuwait Finance House

c) Mihajat’s Parameters
 Research Design

 Qualitative Research

 Analytical Descriptive Approach

 Content Analysis (Reductive Operators Method)

 Quran-o-Hadith as Primary data

 Fiqhi Literature & Legal Issues as Secondary data

 Analysis of Interviews of Contemporary Scholars

 Research Methodology

 Descriptive Research

 Content Analysis

 Reductive Operators Method

1) Leaving Out,

2) Generalization,

3) Construction,

4) Integration,

5)Selection
 Results & Findings

 Avoid Prohibited Elements of Contract

 Avoid clearly nominated prohibited contracts

 Relieve from Orthodox views

 Reconsideration of interpretation of Hadiths

 Overcoming the contradiction

 In depth study required

 Recommendations

 Recommendations of AAOIFI

 Recommendations of Kuwait Finance house

 Inevitability of Hybrid Contracts

 Need of inter-sect dialogue

 Need for personal development

 Resemblance Should be avoided

 Recommendations II

 Need for customer awareness

 Trial & Errors Should not be banned

 Hilah should be banned

 Delegation of authority to Shariah advisors

 Trade rather Lending of Money

 Preservation of Originality of forming contracts

 Limitations

 Time Constraints

 Resource/Financial Constraints

 Cross-Sectional rather Longitudinal

 Limited availability of modern research

 Geographical barriers