Paper Title
A Study on Bay’ Tawarruq (Monetization) from the perspective of National Bank Malaysia and AAOIFI Standards: Malaysian Practice

Abstract
Through the commencement of Islamic Banking Act (IBA) on 1983, until the enactment of Islamic Financial Services Act (IFSA) on 2013, Islamic financial industry has shown its commitments towards the financial industry and its stakeholders through the development of a distinctive products based on the various Sharī’ah contracts such as Islamic hire purchase for vehicle and machine based on the concept of al-Ijārah Thumma al-Bay’ (a contract of leasing ending with sale), Islamic personal financing based on the concept of Bay’ al-Ī’nah (sell and buy back with arrangement), Islamic house financing based on the concept of Mushārakah Mutanāqiṣah (diminishing joint ventures) and others. On 28th July 2005, the Sharī’ah Advisory Council of National Bank Malaysia (SAC BNM) had resolved that financing and deposit product based on the concept of Tawarruq is permissible. This resolution then has become an alternative way for the Islamic financial institutions to overcome the liquidity issue without relying on the controversial contract of Bay’ al-‘Īnah anymore. Tawarruq is a process where a person buys a commodity with deferred price, subsequently sells it on spot payment, usually with lower price to another party other than the first seller, with intention to obtain cash/liquidity. Thus, this study aims to discuss the role of National Bank Malaysia and Accounting and Auditing of Islamic Financial Institutions (AAOIFI) Standard regarding the concept of Tawarruq in Malaysia. With regard to the methodology, this study will use both qualitative and quantitative methods. However, the qualitative method will become the main method for this study. The instrument of qualitative method is an interview session with the main stakeholders involved in the development of Tawarruq Standard. This study will contribute from the theoretical and practical perspective of Tawarruq operation and application in Malaysia, argument and deliberation of Tawarruq not only from classical Islamic perspective, but also from modern application and discussion.