Journal Article

This research aims to examine the impact of the Covid-19 pandemic on contractual obligations in Islamic banks. It explores the Shariah issues arising from the pandemic, the Shariah approaches considered in addressing these issues, and the rights of the various contracting parties affected by the pandemic. The study employs both descriptive and analytical methodologies. The descriptive approach is used to analyze the fiqh perspectives on Covid-19 and relevant jurisprudential theories, while the analytical approach assesses the application of Islamic legal maxims to contractual obligations and evaluates the consequences on existing contracts within the Islamic finance industry. Additionally, a comparative approach is adopted to examine the Ijtihad (independent reasoning) of both classical and contemporary scholars, highlighting the pandemic's impact on key Islamic financial transactions. The study concludes that postponing the payment of installments under a murabahah contract with a fixed profit rate, or rescheduling with an increase, would result in the prohibited practice of pre-Islamic riba. However, in a murabahah contract with a variable or floating rate, where the contract stipulates a higher price or ceiling profit rate, the bank may commit to providing a rebate (ibra') to customers who pay their installments as scheduled. In such cases, the customer is only required to pay the effective rate. Furthermore, the study finds that banks may adjust future installments in lease contracts and diminishing partnership contracts (musharakah mutanaqisah), but not for installments that are already due and payable. Importantly, banks should not require customers to pay additional amounts to cover losses incurred during the postponement period.

This note explores the challenges surrounding idle Waqf (Endowment) land in Malaysia and proposes an innovative framework for Waqf-linked Sukuk (Bonds) to address funding constraints and unlock the potential of Waqf assets for socio-economic development. Drawing on the evolution of Waqf and Sukuk, guided by Islamic principles, this note examines the legal, regulatory, and societal implications of the proposed framework. By integrating Waqf into Malaysia's sophisticated Islamic finance system, the framework aims to mobilize funds for Waqf projects while ensuring Shariah compliance and investor confidence. This note discusses the influence of Islamic principles on Waqf and Sukuk development and highlights the societal and transnational impacts of the proposed framework. Ultimately, the research underscores the importance of innovative strategies to harness Waqf assets for sustainable socio-economic progress, offering insights for policymakers, scholars, and practitioners in Islamic finance and philanthropy.

Sustainable Responsible Investment (SRI) Sukuk are instruments aimed at improving the condition of societies and communities. Sukuk itself are Shari ah compliant alternatives to bonds or technically they are certificates of equal value represent fractional ownership or investment in assets, structured according to Shari ah principles. The Sustainable and Responsible Investment Sukuk Framework was issued by the Securities Commission of Malaysia for Sukuk that funds green projects, social projects or projects that develops waqf (endowment) assets. This note examines the use of Sukuk for more than just commercial gain, this paradigm shift is welcomed and necessary to stay true to the Maqasid al Shari ah (the goals and objectives of Shari ah) to provide ease for people. In this note, two examples of SRI Sukuk namely Sukuk Prihatin (Empathetic Sukuk) and Ihsan Sukuk (Excellence Sukuk) will be examined. The SRI Sukuk focusses on positive social change, while there is a return on investment there is also an additional emphasis on enabling less privileged segments of the society to benefit from the funds provided through the issuance of the Sukuk. The objective of this note is to explain SRI Sukuk framework and examine case studies and provide recommendations for future SRI Sukuk issuances and understand how the Maqasid al Shari ah (the goals and objectives of Shari ah) is being pursued.1 The methodology used in this note is non-doctrinal and document analysis. Secondary sources were reviewed to answer the research objective.

The primary objective of this paper is to draw lessons from Sri Lanka's experience with OrphanCare utilizing Islamic social finance, while also identifying avenues through which Malaysia could establish a sustainable model for achieving a similar purpose. This study uses a qualitative, exploratory approach to investigate the operational framework of OrphanCare in Sri Lanka and its potential lessons for Malaysia. Due to limited secondary sources, an unstructured interview with OrphanCare representatives was conducted to gather in-depth insights. The research unfolds in two phases: first, data collection from both primary (interviews) and secondary (reports, literature) sources to identify gaps and challenges; and second, the analysis of this data using content analysis. The OrphanCare interview from Sri Lanka offers crucial insights for Malaysia's mission in enabling orphan access to higher education. Challenges, like financial constraints and limited support networks, align with Malaysia's inequality reduction goals. Tertiary education benefits, including employability and personal growth, are highlighted. Islamic social finance lessons stress its transformative potential, while collaboration and long-term commitment are its strengths. Recommendations include education funds, support networks, career guidance, awareness campaigns, and sustainable collaborations. A regulatory framework featuring the Orphans Education Fund with a 2% annual contribution from listed companies, managed by National Higher Education Fund Corporation (PTPTN), is proposed. This paper demonstrates originality by uniquely proposing the utilization of Islamic Social Finance to enhance orphan access to tertiary education. It draws insights from Sri Lanka's OrphanCare model and presents innovative strategies for Malaysia to tackle inequalities through collaborative efforts and a robust regulatory framework.

The exercise of modelling the risk and volatility of corporate bonds is undertaken through credit spreads analysis, a practice normally used in bond pricing and risk management. Despite the rapid growth of the Malaysian bond market, very few studies on the behaviour of credit spreads, and whether its volatility is influenced by external shocks have been conducted. This paper aims to unveil the trends and behaviour of credit spreads during the 2007/2008 global financial crisis. It examines the credit spreads of the Malaysian bond market by modelling the conditional variance and asymmetric response to past shocks of the long and short term investment and non-investment grade papers. A generalised autoregressive conditional heteroscedasticity (GARCH) is applied to 10 different ratings and maturity over the period ranging from 1 August 2005 to 31 December 2011. More specifically, modelling the asymmetry via the threshold GARCH (TARCH) and exponential GARCH (EGARCH) models meets the aim of this paper which examines the asymmetric response to past shocks of the Malaysian bond market during the 2007/2008 global financial crisis. The empirical analysis of this paper provides evidence of strong time-varying conditional variance of the Malaysian bond credit spreads with the expectation of future rate being the main determinant for credit spreads. Additionally, the evidence also indicates that past news or shocks as well as forecast variance are important in explaining the volatility of the spreads. The insignificant TARCH and EGARCH coefficients, nonetheless, indicate that there is no evidence of asymmetric response to past shocks in the volatility of bond spreads.

Purpose This paper aims to critically evaluate whether the policies of green banking set by Bangladesh Bank are Shariah compliant; according to the main sources of the Shariah Quran and Sunnah. Design/methodology/approach Green policy and guidelines have been divided into different categories such as environment protection, conservation of resources, risk management, educating people about green financing, transparency and disclosure and investing in green projects according to the common measures as stated in three different phases of the policy and guidelines. Subsequently, these major aspects of the green policy and guidelines are linked to the main references of the Shariah, i.e. the holy Quran and Sunnah of Prophet [peace be upon him (pbuh)]. Findings Various verses of the holy Quran and teachings of Prophet (pbuh) related to the major categories of Green policy and guidelines are being presented to show the compliance with Shariah. Practical implications The Green policy and guidelines are very much in-line with Shariah. Though all types of banks in Bangladesh are bound to implement the green banking policy, however, Shariah compliance of green banking policy will be encouraging for all Islamic Banks of Bangladesh for their further and profounder involvement in it. Social implications As green policies are found to be Shariah complaint, the Islamic banks are expected to contribute more to the sustainable economic growth of the country by successfully implementing the green financing policies compare to their conventional counterpart. Originality/value Verses of holy Quran and authentic Hadiths related to environmental sustainability concept show that Islam is a green religion as well as green banking policy is Islamic.