AYA Financial

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Before commenting on AYA Financial in reference, we present three considerations to determine Shariah Compliancy of any product claiming to be Shariah Compliant.

1. THE PROSPECTUS.

When a product is marketed as Shariah Compliant, the general concept of the product is referred to in the prospectus. A prospectus is generally used as a marketing instrument and is designed to attract potential investors. A broad concept of the product is presented with much focus on promising returns. While we understand the need for an attractive prospectus, the more important aspect is to determine the claim of Shariah Compliancy which leads to the second point.

2. THE CONTRACT.

When a product is marketed as Shariah Compliant in the prospectus, the actual terms and conditions of the Islamically claimed concept must be reflected in the contract. It is very easy to market a product with an Islamic concept, for example Musharakah Mutanaqisa (Diminishing Musharakah). However, this in an engineered product of few concepts, partnership(Musharakah), hiring (Ijarah) and purchasing(Bay). This product involves three concepts which must be reflected in the contracts and with the correct sequence of each step. If the three concepts are not reflected in the contracts and if the sequence is not adhered to, the product will not be Shariah Compliant. Furthermore, assuming the prospectus and the contracts reflect the correct spirit of the product, that is not sufficient. That leads us to the third point.

3. IMPLEMENATION.

The core of Islamic Finance is implementing the product claimed as Shariah Compliant according to the terms and conditions reflected in the contract. It is one thing to have a Shariah Compliant contract and it is another to enact the product according to the contract. If the product is not enacted according to the terms and conditions of the contract, the transaction cannot be claimed as Shariah Compliant.

It is unfortunate that we have observed many products claimed and marketed as Shariah Compliant falling short in the Shariah Compliancy of the contract or its implementation.

In the enquired product of AYA Financial, you may forward us the actual contract for our observations and comments. You may email us on [email protected].

We also wish to point out that we support the concept of Islamic Finance and would engage with relevant parties in a constructive way. We believe promoting Islamic Finance and Economics and conducting all our dealings according to Shariah is an important part of Deen.

And Allah Ta’āla Knows Best

Huzaifah Deedat

Student Darul Iftaa
Lusaka, Zambia

Checked and Approved by,
Mufti Ebrahim Desai.