An Overview Of The Wide Extent Of Tawarruq Implementation In Malaysia Islamic Banking Products


  • Nurjannah Hasmad Master Student
  • Abdulrahman Alosman Lecturer


Financing, Tawarruq, Islamic, Banking, Products


The Shariah financing concept tawarruq is dominating Islamic banking products nowadays. Tawarruq concept is underpinning various Islamic finance and banking products and growing its portfolio proportion year by year in Malaysia Islamic banking and finance industry. This paper aims to  give an overview of the wide extent of tawarruq implementation in Malaysian Islamic banking products. This study employs qualitative approach using library research method by examining and analyzing secondary data collected from multiple sources such as journal articles, policy documents, books, resolutions, standards, product disclosure sheets and reports. Results of this paper suggest that steps taken by official bodies like issuing a much lenient Shariah standards on tawarruq application than other international standard setting bodies like AAOIFI and Council of International Islamic Fiqh Academy by Bank Negara Malaysia and establishment of Bursa Suq As-Sila to facilitate tawarruq implementation by Bursa Malaysia is much aiding the application of tawarruq concept in Malaysia notwithstanding some issues causing controversies regarding its application. The study also revealed that Islamic banking products such as Islamic personal financing, Islamic home financing, Islamic credit cards and Islamic deposit account are applying tawarruq concept in a wider term in replacing the application of previous Shariah concepts. It is concluded that tawarruq is gaining larger popularity among Islamic finance and banking industry players, however, innovative alterations need to be applied on the current practice of tawarruq to mitigate critiques surrounding it.


Download data is not yet available.

Author Biographies

Nurjannah Hasmad, Master Student

Kuliyyah of Islamic Revealed Knowledge and Human Sciences,  International Islamic University Malaysia (IIUM)

Abdulrahman Alosman, Lecturer

Human Sciences Department, International Islamic University Malaysia (IIUM).


AAOIFI. 2015. The Accounting and Auditing Organization for Islamic Financial Institution Shari’ah Standards. Dar Al-Maiman.

Abd Rahman, Z. 2016. An Investigation of Gambling Elements in Tawarruq Baes Profit Rate Swap and Options. 11th International Conference on Islamic Economics and Finance.

Al-Bahutiyy, M. bin Y. 1983. Kashaf Al-Qina‘ ‘An Matn al-Iqna‘. ‘Alam Al-Kutub.

Al-Qurrafiyy, A. bin I. 2010. Anwar Al-Buruq fi Anwa‘ Al-Furuq. Wizarat Al-Awqaf Al-Sa‘udiyyah.

Al-Nawawiyy, A. Z. M. 1991. Raudah Al-Talibin wa ‘Umdah Al-Muftin. Al-Maktab Al-Islamiyy.

Al-Sarkhasiyy, M. bin A. 1993. Al-Mabsut. Dar Al-Ma‘rifah, Vol. 7.

Ibn Al-Humam, A.-K. n.d. Al-Fath Al-Qadir. Dar Al-Fikr.

Ibn Muflih, S. 2003. Al-Furu‘. Muassasah Ar-Risalah.

Kahf, M. 2015. Islamic Finance Contracts. M. Kahf, 2nd ed.

Kuwayt, W. A.-A. & A.-S. A.-I. 1983. Al-Mawsu‘ah Al-Fiqhiyyah Al-Kuwaytiyyah. Wizarah Al-Awqaf wa Al-Shu’un Al-Islamiyyah Kuwayt, Vol. 14.

Majma‘ Al-Fiqh Al-Islamiyy Al-Duwaliyy. 2020. Qararat wa Tawsiyyat Al-Majma‘ Al-Fiqh Al-Islamiyy Al-Munbathiqu ‘An Munazzamat Al-Ta‘awun Al-Islamiyy. Majma‘ Al-Fiqh Al-Islamiyy Al-Duwaliyy, 4th Ed.

Theses & Dissertation

Abdul Rahman, Z. N. 2014. Tawarruq in Personal Financing: Theory and Practice. Master Thesis, Faculty of Accountancy, Universiti Teknologi Mara (UiTM).

Ahmad, N. H. 2014. Determinants of Customer’s Intention to Use Islamic Personal Financing. Master Research Paper, Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia (UUM).

Nik Abdullah, N. S. 2014. Factors Affecting the Intention to Use Islamic Personal Financing. Master Research Paper, Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia (UUM).

Omar, N. H. 2018. Pelaksanaan Sistem Pembiayaan Bai‘ al-Tawarruq Pada Bank Islam Malaysia Berhad (BIMB) Cabang Selangor Dalam Perspektif Hukum Islam (Analisis Akad Baiti Home Financing). Skripsi Beban Studi, Ilmu Hukum Ekonomi Syari‘ah, Fakultas Syari‘ah dan Hukum UIN Ar-Raniry Darussalam Banda Aceh.


Adznan, S. 2018. Investment Account: Issues, Challenges and the Way Forward. The Journal of Muamalat and Islamic Finance Research, 15(1), 1–15.

Ahmad, E. F., Shihama, M., Mohamad Tarmizi, N. S. A., Jibril, S. M., Djama, S. I., & Muneeza, A. 2017. Tawarruq as a Product for Financing within the Islamic Banking System: A Case Study of Malaysian Islamic Banking System. International Journal of Management and Applied Research, 4(1), 31–43.

Ali, M. M., & Hassan, R. 2016. Determinants of Shariah Non-Compliant Events in Islamic Banks in Malaysia: With Special Reference to Tawarruq-Based Financing. Al-Shajarah Journal of Islamic Thought and Civilization, 217–242.

Ali, M. M., & Hassan, R. 2020. Survey on Sharī‘ah Non-Compliant Events in Islamic Banks in the Practice of Tawarruq Financing in Malaysia. ISRA International Journal of Islamic Finance, 12(2), 151–169.

Amin, H. 2013. Some Viewpoints of Islamic Banking Retail Deposit Products in Malaysia. Journal of Internet Banking and Commerce, 18(12), 1–13.

Amin, H., & Abdul Hamid, M. R. 2018. Patronage Factor of Tawarruq Home Financing Product in Malaysia. International Journal of Business and Society, 19(3), 660–677.

Balarabe, A., Abdullah, Md. F., & Ibrahim, B. U. 2020. A Review of Islamic Credit Card Concepts From Shari’ah Perspective in Malaysia. Artech Journal of Art and Social Sciences, 2(4), 122–126.

Bassir, N. F., Zakaria, Z., Abu Hasan, H., & Alfan, E. 2014. Factors Influencing the Adoption of Islamic Home Financing in Malaysia. Transformations in Business and Economics, 13(1), 155–174.

Bilal, M., & Mydin Meera, A. K. 2015. Al-Muqassah Model: An Alternative Shariah-Compliant Islamic Credit Card Model for Islamic Financial Institutions in Malaysia. International Journal of Islamic and Middle Eastern Finance and Management, 8(4), 418–438.

Chong, P. H., & Dastane, O. 2017. Buying A Dream Home – Considerations of Residential Property Consumers in Malaysia. Singaporean Journal Of Business, 5(9), 19–35.

Ibrahim, M. F., & Kamarudin, R. 2018. Islamic Home Financing Based on Debts: A Review of Practices Of Islamic Banks In Malaysia. Labuan E-Journal of Muamalat and Society, 12, 43–50.

Ismail, A. G., Nik Abdul Ghani, N. A. R., & Mat Zain, M. N. 2013. Tawarruq Time Deposit With Wakalah Principle: An Opinion That Triggers New Issues (1435-02). International Journal of Islamic and Middle Eastern Finance and Management, Vol. 9 No. 3, 388-396.

Ismail, S., Azmi, F., & Thurasamy, R. 2014. Selection Criteria for Islamic Home financing in Malaysia. International Journal of Business and Society, 15(1), 97–110.

Jamaludin, A. 2018. Why in Favor of Tawarruq Not Bai‘ Al-‘Inah in Personal Financing Product? International Journal of Islamic Banking and Finance Research;, 2(1).

Kahf, M., & Mohomed, A. 2016. Credit Cards: Contemporary Issues from Economic and Shariah Perspective. Journal of King Abdulaziz University: Islamic Economics, 29(1), 57–80.

Mahyudin, M. I., & Che Seman, A. 2014. Bay‘ Al-Tawarruq dan Aplikasinya di Bank Muamalat Malaysia Berhad. The Journal of Muamalat and Islamic Finance Research, 11(1), 75–96.

Maswadeh, S. N. 2020. How Investment Deposits at Islamic and Conventional Banks Effect Earnings Per Share? The Journal of Asian Finance, Economics and Business, 7(11), 669–677.

Md Dahlan, N. H. 2018. Commodity Murabahah Islamic home finance in dealing with abandoned housing projects in Malaysia: Features, Issues & Prospects. International Journal of Education, Islamic Studies and Social Sciences Research, 3(1), 1–11.

Michael, H. O. 2021. The Development of Bursa Suq Al-Sila’ in Malaysia as a Commodity Trading Platform for Islamic Finance. Kansai University Review of Business and Commerce, 20, 1–19.

Mohamad, M. T., Aminuddin, M. N., & Hasbulah, M. H. 2018. Pembiayaan Perumahan Berasaskan Komoditi Murabahah: Kajian Kes di CIMB Islamic Bank. International Journal of Islamic and Civilizational Studies, 5(3), 68–80.

Mohamad, N., & Ab Rahman, A. 2014. Tawarruq Application in Islamic Banking: A Review of the Literature. International Journal of Islamic and Middle Eastern Finance and Management, 7(4), 485–501.

Muhammad, N., Syed Alwi, S. F., & Muhammad, N. 2018. Analysis of Preference of Using Tawarruq Contract in Retail Financing Products Among Islamic Banks. International Journal of Innovation, Creativity and Change, 8(3), 156–172.

Rosele, M. I. 2017. Analysis of Element Al-Hajah In Personal Financing. International Journal of Islam and Civilizational Studies, 4(3), 43–51.

Sawari, M. F., Nik Abdullah, N. A., Mat Jubri, M., & Abd Aziz, A. 2018. Issues of Bai‘ al-‘Inah in the Contemporary Islamic Financial Products and Its Solutions According to the Shariah Principles. South East Asia Journal of Contemporary Business, Economics and Law, 15(5), 95–103.

Shafie, M. M., Mat Zain, M. N., & Nik Abdul Ghani, N. A. R. 2020. Commodity Murabahah Deposits in Islamic Banking: An Easy Way Out. Islamiyyat, 42(1), 15–22.

Shaharuddin, A., Musa, A. A., Mohamad Nawi, F. S., Mohamed Ahmad, A. H., & Ab Mumin, M. 2020. Dual Agency Practices in Islamic Financial Institutions: A Fiqh Perspective. Journal of Fatwa Management and Research, 21(1), 38–48.

Sharaiyra, S. W., & Haswa, M. 2019. The Effect of ‘Motive’ on Characterising Organised Tawarruq. Arab Law Quarterly, 33(2), 179–197.

Sillah, B. M. S. 2017. Islamic Credit Cards: How Do They Work, And Is There A Better Alternative? Journal of Islamic Banking and Finance, 5(2), 1–8.

Sobol, I., & Dopierla, L. 2019. Deposit Funding of Islamic and Conventional Banks in Malaysia. Gdańsk East Asian Studies, 16.

Thaidi, H. A. A., Ab Rahman, M. F., & Ab Rahman, A. 2014. Analisa Eksistensi Gharar Terhadap Perlaksanaan Pembiayaan Peribadi Tawarruq. Global Journal At-Thaqafah, 4(1).

Uddin, M., Hossin, M. M. I., Chowdhury, A. Y., & Islam, Mohd. A. 2018. Concept of Islamic Credit Card Based on Malaysia. Saudi Journal of Business and Management Studies, 3(2), 172–176.

Yusoff, A. F., Mat Zain, M. N., Yaacob, S. E., Hanafi, H., Nik Abdul Ghani, N. A. R., Mohammad Idrus, A. M., & Md Radzi, M. S. R. 2016. Islamic Personal Financing Instruments in the Malaysian Banking Industries: Issues and Alternatives. Journal of Contemporary Islamic Law, 1(1), 24–38.

Zulkepli, M. I. S., & Mohamad, M. T. 2019. Hiyal Analysis in Deposit Product Based on Tawarruq Contract in Malaysian Islamic Banking. Online Journal of Research in Islamic Studies, 6(1), 43–59.

Zulkepli, M. I. S., & Mohamad, M. T. 2020. Mekanisme Kawalan Risiko Syariah Terhadap isu Dual-Agency Dalam Produk Deposit Berasaskan Tawarruq Dalam Perbankan Islam di Malaysia. Labuan E-Journal of Muamalat and Society, 14, 1–10.

Conference & Proceeding

Asni, F. 2019. The Alternative Of Using Bay‘ ‘Inah In Malaysia: An Overview. In “Role(s) and Relevance of Humanities For Sustainable Development. Europian Proceedings, 743–748.

Bahari, N. F., & Baharudin, N. A. 2014. Kontrak Shariah Al-Tawarruq: Konsep dan Aplikasinya Dalam Produk Perbankan Islam. E-Proceedings of the Conference on Management and Muamalah, 329–340.

Kahf, M., & Mohomed, A. N. 2017. Islamic Personal Financing: An Attempt to Engineer Shari’ah-Compliant Instruments. International Shari’ah Scholars Forum (ISSF).

Othman, M. B. 2016. Impact of Financial Innovations on Islamic Finance: The case of Bursa Suq Al-Sila’ and Islamic Financial Services Act 2013. 4th ASEAN International Conference on Islamic Finance (AICIF 2016).

Wong, V. K., & Aralas, S. 2019. Macroeconomic Variables and Housing Price in Malaysia. Proceedings of the International Conference on Economics 2019 (ICE 2019) , 23–34.


Bank Islam Malaysia Berhad. 2021. Bank Islam Credit Card-i. In “Bank Islam Malaysia Berhad”.

Bank Negara Malaysia. 2009. Your Guide on Basic Savings and Current Accounts. Bank Negara Malaysia.

Bank Negara Malaysia. 2010. Shariah Resolutions in Islamic Finance (2nd ed.). Bank Negara Malaysia.

Bank Negara Malaysia. 2013. Islamic Financial Service Act 2013. In “Bank Negara Malaysia”. Bank Negara Malaysia.

Bank Negara Malaysia. 2014. Financial Stability and Payment Systems Report 2014.

Bank Negara Malaysia. 2016. Financial Stability and Payment Systems Report 2016.

Bank Negara Malaysia. 2017. Investment Account Policy Document. In “Bank Negara Malaysia”. Bank Negara Malaysia.

Bank Negara Malaysia. 2018a. Financial Stability and Payment Systems Report 2018.

Bank Negara Malaysia. 2018b. Tawarruq. In “Bank Negara Malaysia”. Bank Negara Malaysia.

Bank Negara Malaysia. 2019. Credit Card-i. In “Bank Negara Malaysia”. Bank Negara Malaysia.

Bank Negara Malaysia. 2020. Financial Stability Review Second Half 2019.

Bank Negara Malaysia. 2021a. Commercial Banks and Islamic Banks: Non-Performing/Impaired Loans by Purpose.

Bank Negara Malaysia. 2021b. Islamic Banking System: Deposits by Type.

Bank Negara Malaysia. 2021c. Islamic Banking System: Financing by Type.

BMB Islamic. 2011. Global Islamic Finance Report 2011.

BMB Islamic. 2016. Global Islamic Finance Report 2016.

Bursa Malaysia. 2014. Bursa Suq Al-Sila‘. In “Bursa Malaysia”. Bursa Malaysia.




How to Cite

Hasmad, N., & Alosman, A. (2022). An Overview Of The Wide Extent Of Tawarruq Implementation In Malaysia Islamic Banking Products. Al-Qanatir: International Journal of Islamic Studies, 26(1), 37–55. Retrieved from