Browse by Author "Mezbah Uddin Ahmed"
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- PublicationApplication of murabahah mode of financing by Islamic banks of Bangladesh: issues and recommendationsMd. Mahabbat Hossain; Md. Atiqur Rahman Khan Khadem; Mezbah Uddin Ahmed; Mezbah Uddin Ahmed (2023)
Murabahah is a sale contract whereby the seller adds a markup with cost and discloses the amounts to the buyer. Islamic banks apply this concept to finance their customers on a short- and long-term basis. In fact, about 70 per cent of the total investments of the Islamic banks in Bangladesh is based on the murabahah concept. However, the application of this concept varies from bank to bank and product to product. Some of the practices face heavy criticism from different stakeholders. This research aims to identify the application of murabahah by the Islamic banks in Bangladesh in offering various investment products and compare these practices with the Shari'ah requirements of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and other reputed Shari'ah authorities. The research adopted a content analysis approach whereby the murabahah contract documents of all full-fledged Islamic banks in Bangladesh are examined. The research further conducted interviews of Islamic banking practitioners to establish the process flow of different murabahah-based investment products and conducted focus group discussions to validate the findings. The research finds the scope for improvements that the Islamic banks of Bangladesh may consider in achieving greater compliance with the AAOIFI Shari'ah standards. The research also proposes relevant recommendations for consideration of the Islamic banks of Bangladesh. The findings and recommendations of the research would be a reference for the Shari'ah governance functions of Islamic banks including the Shari'ah supervisory boards in identifying the potential weaknesses and to take steps in addressing those weaknesses
- PublicationIstijrar: an alternative solution to murabahah-based import financing facilities under letter of credit-I in MalaysiaMuhamad Nasir Haron; Aniza Rahaya Zulkifli; Marjan Muhammad; Mezbah Uddin Ahmed (International Shari'ah Research Academy for Islamic Finance (ISRA), 2020)
Islamic banks provide similar trade finance facilities to those of conventional banks. They intermediate between buyers (i.e., importers) and sellers (i.e., exporters), act as a custodian of documents, and provide means to reduce payment risks via different payment terms (e.g., open account, documentary collection and letter of credit (LC)). They also provide financing - as need be - to help with working capital tied to the trade transactions. This research focuses only on financing by Islamic banks to importers that involve LCs. Different underlying Shari'ah contracts are used for import financing facilities under LC, the most common being the murabahah contract. At the time of sale, the existence of the subject matter and its ownership by the seller are the key requirements for the validity of a murabahah contract. In the absence of either of these requirements, the contract is considered null and void.
- PublicationProtection of investment account holders in Islamic banks in Malaysia: legal and accounting in MalaysiaMezbah Uddin Ahmed; Noor Suhaida Kasri (ISRA Consultancy Sdn Bhd, 2017)
The Islamic banking industry in Malaysia is governed by the Islamic Financial Services Act 2013 (IFSA). This legislation marks another step in the evolution of the Islamic banking industry in Malaysia. Among its unique components, it re-classifies deposittaking products into two, namely Islamic deposits and investment accounts. The distinction has brought about a significant impact on the role that Islamic banks have traditionally been playing. The move from purely a credit intermediary to a mixed credit-and-investment intermediary is expected to promote real economic growth and development. In IFSA, investment account is defined as an account under which money is paid and accepted for the purposes of investment. This must be in accordance with the Shariah on terms that there is no expressed or implied obligation for the Islamic bank to repay the money in full or with any profit. This definition is instrumental as it explicitly distinguishes the character of an investment account from an Islamic deposit account as the latter guarantees return of the capital with or without a profit. This definition embeds statutorily the true spirit of Shariah-compliant investments, namely profit and loss sharing in musharakah, profit sharing and loss bearing in mudarabah and fee-based in wakalah bil istithmar.
- PublicationShari'ah analysis of zakat on sukukMezbah Uddin Ahmed; Moutaz Abojeib; Mahadi Ahmad; Mezbah Uddin Ahmed (International Shari'ah Research Academy for Islamic Finance (ISRA), 2021)
Sukuk in its contemporary form as a financial instrument has gained prominence only over the last one to two decades. Like a share, a sukuk is defined as an instrument representing undivided ownership over the underlying assets. Naturally, the question arises whether sukuk are subject to the same zakat rulings as shares. Accordingly, this research has identified the similarities between shares and Sukuk. The zakat rulings applicable to shares are also identified, and the research has made an attempt to apply those rulings in the context of sukuk. However, the research has identified the peculiarities of sukuk as it is currently practiced in the global market and provided fresh insights on how these may impact the applicability of zakat to sukuk. While the research includes theoretical Shari'ah analysis and discussion on various relevant zakat matters, it also reviews today's practices. Accordingly, relevant Shari'ah standards and requirements of various jurisdictions are identified, and several sukuk prospect uses are examined in relation to zakat calculation and disclosures. By this the research aims at enabling a coherent understanding of the theory and practice.
- PublicationShariah audit of Islamic banks in BangladeshMd. Kausar Alam; Abu Umar Faruq Ahmad; Mezbah Uddin Ahmed; Md. Salah Uddin; Mezbah Uddin Ahmed (Emerald Publishing Limited, 2023)
The study explores the existing Shariah audit practice of Islamic banks (IBs) in Bangladesh aiming at providing suggestions for improvements on the detected shortfalls in the relevant areas. This research applied a qualitative method, and data were collected through conducting semi-structured interviews in Bangladesh. A total of 17 interviews were conducted for accomplishing the research objectives. The study finds that there is no comprehensive Shariah audit manual in the current operation for IBs in Bangladesh, and as such, the requirements of their Shariah compliance remain a big question. Although the Shariah audit is conducted within IBs, and the Shariah audit officers or Shariah officers inspect necessary documents while conducting the Shariah audit, they only cover 10�20% of total investments and transactions. Based on the findings of this study, it is recommended that the Shariah auditing tasks should broadly cover at least 80% of the investment portfolios, documents and financial contracts and activities. The findings of this research are expected to significantly contribute to the regulatory authorities concerned in Bangladesh and beyond, which include the suggestions that IBs can adopt to strengthen their Shariah governance system. The study also pinpoints that in the current system, Shariah auditors� roles are somehow limited in examining and checking the investment sides with a minimal portion (10�20%), for which they are unable to perform their responsibilities in a befitting manner to provide assurance services and overall Shariah compliance of IBs activities. This study explores the current Shariah audit systems and provides recommendations to improve the existing systems which will be beneficial for Islamic banks of Bangladesh.
- PublicationZakat calculation software for corporate entitiesMezbah Uddin Ahmed; Noor Suhaida Kasri (Palgrave Macmillan, 2021)
Ensuring socio-economic justice, eradication of poverty and equitable distribution of wealth are among the primary objectives of Islam. Even so, a significant number of Muslims around the world are deprived of their basic needs. The scenario only worsens in times of financial and political turbulence. There is a desperate need to find sources of funding to rescue people from their miseries and offer sustainable solutions. Zakat has great potential to meet the funding needs. This chapter argues that zakat contributions will be amplified if corporate entities pay zakat as legal persons or on behalf of their Muslim shareholders. This chapter proposes development of a zakat calculation software to facilitate corporate entities and Islamic financial institutions calculating their zakat obligations reliably. Development of such software requires Islamic finance research entities to team up with information technology experts. Prominent Shariah scholars will play the essential role of validating and endorsing the Shariah compliance of the software.
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