Diversification of Islamic Financial Instruments
18
Product/ Process Middle East North Africa Malaysia Indonesia
Working capital
financing based on
Tawarruq ,
Mudharabah or
Musharakah
Mudharabah
and
Musharakah
offered but not
Tawarruq as it
is prohibited
Mudharabah
and
Musharakah
offered but not
Tawarruq as it
is prohibited
Only Tawarruq
is being offered
by banks
Mudharabah
and
Musharakah
offered but not
Tawarruq as it
is prohibited
Syndication
origination,
processing and
support
Basic
requirements.
Subscription
received under
Musharakah
and other
structures
Basic
requirements.
Subscription
received under
Musharakah
and other
structures
Syndication
mimics
arrangement in
conventional
using Sharia
compliant
structures
Basic
requirements.
Subscription
received under
Musharakah
Rebate processing Rebates are
given at end of
financing or at
redemption
Rebates are
given at end of
financing or at
redemption
Rebates are
given during or
at end of
financing
Rebates are
given at end of
financing or at
redemption
Penalty charging Penalty charged
is always given
to charity
Penalty charged
is always given
to charity
Penalty charged
is treated as
income, and if
above a
threshold to be
given to charity
Penalty charged
is treated as
income, and if
above a
threshold to be
given to charity
Asset securitization
(Selling of financing
assets to other
parties)
Practice is now
emerging
Not Prevalent This is common
practice in
Malaysia
wherein a
government
body buys
mortgages from
banks to
enhance
liquidity
Requirement is
being discussed
but is yet to be
approved by the
Sharia scholars
Rescheduling and
restructuring
Complete
flexibility
required,
especially for
corporates
Complete
flexibility
required,
especially for
corporates
Complete
flexibility
required,
especially for
corporates and
VVIPs
Less complex
requirements
than ME, Africa
and Malaysia
Collection External
collectors and
lawyers are
used
extensively by
banks and they
form part of the
eco-system and
must be
External
collectors and
lawyers are
used
extensively by
banks and they
form part of the
eco-system and
must be
Same as ME and
Africa
Less complex
requirements.
Collections are
mostly handled
by internal
collectors