Shariah Issues on Selected Hybrid Products Practiced by Islamic Banks

This article examines the Shariah aspects of certain hybrid products practiced by Islamic banks in Malaysia and provides a comprehensive analysis of the Shariah principles governing the implementation of these hybrid contracts. Among the hybrid contracts, bayʽ bithaman ajil (BBA) and tawarruq have raised concerns due to their potential for facilitating interest ( ribā ) in buying and selling transactions. On the other hand, other hybrid contracts like mushārakah mutanāqiṣ ah and murābaḥ ah to the purchase order are deemed less controversial. When applying these contracts, adherence to important Shariah principles is crucial, including the permissibility of individual contracts, independence of contracts, absence of contradictory commitments, and avoidance of any form of ribā . This study has significant implications for Islamic banking and finance institutions, as well as the Muslim community at large, by promoting the development and provision of Sharia-compliant products and enhancing confidence in their dealings with these institutions.


Background of the study
Islamic banking products and services, including saving and financing, are essential for community life and have become most accessible compared to other services in the Islamic finance industry.Personal finances offered by an Islamic bank in Malaysia indirectly impact the economy since it increases the amount of manufacturing of things such as automobiles, electronics, and even houses (Gani & Bahari, 2021).Saving behaviour in Islamic financial institutions, especially Islamic banks, significantly affects family financial management (Nor et al., 2020).It implies that Islamic banking would impact family well-being and sustain the economy.In the view of Sharīʽah (Islamic law) and maqaṣīd (objectives), the operation of Vol 12, Issue 3, (2023) E- ISSN: 2226-6348 To Link this Article: http://dx.doi.org/10.6007/IJARPED/v12-i3/19387DOI:10.6007/IJARPED/v12-i3/19387 Published Online: 20 September, 2023 Islamic banks, inclusive of their offered products, should comply with the Sharīʽah principle to achieve the maqaṣīd (Khadijah et al., 2010).According to Islamic banking experts and some Muslim scholars, using hybrid contracts by almost all Islamic banks causes controversial issues (Arbouna, 2007).This is because a ḥadīth forbids merging two contracts into one contract.Besides, in some schemes, it is considered a trick to use usury, such as bayʽ al-ʽīnah and bayʽ al-wafa'.The hybrid contract debate primarily concerns legality, which frequently contradicts Islamic principles (Maulin, 2020).Therefore, the Sharīʽah framework for the hybrid contract is essential to ensure the Sharīʽah compliance practice of Islamic banking.Based on this background, this study aims to highlight the Shariah principles on hybrid contracts and analyse their application in Islamic banks in Malaysia.

Contract Form an Islamic Perspective
In Arabic, contract or al-aqd means an obligation or a tie.The contract is a source of obligation, and the fulfilment of that is a duty, as illustrated in Surah al-Maida, verse one: "Oh ye who believe, fulfil your undertaking" then, in another verse, the Holy Qur'an calls upon believers to observe their commitments as they will be accounted for them.According to Rosly (n.d.), in Islam, the validity of a contract requires four elements: 1. Buyer and seller 2. Price 3. Subject matter 4. Offer and acceptance.Besides, these elements also have their requirements: firstly, the subject must be valid in Sharī'ah (mal-mutaqawim).Secondly, the seller should have legal ownership of goods, and thirdly, the price must be set on the spot and made known to the buyer.Fourthly, the buyers and sellers should be rational (aqil) and adults (blah) enough to conduct the trade to understand their respective roles and obligations.Fifthly, the element of ambiguities (gharar) must be avoided in all contracts as its presence will cause defects to the contract and turn it null and void.Whenever gharar fāḥish exists in the contract, it is considered null and void because the counterparties receive no legal protection.According to Alam et al. (2017), the Sharīʽah law of contract is primarily based on three fundamental aspects: • The aspect of justice in any transactions and contract, as mentioned in al-Nisā':58, ensures that neither party to a contract can take advantage of the other.As a result, the ribā is strictly forbidden in Islam.• The principle of transparency and accountability is affirmed in al-Anfāl:27 and 71.All accessible information must be shared by those involved.The contract could be void if critical information about the transaction is kept secret.Contracts with a high level of gharar, i.e. gharar fāḥish, are also strictly prohibited.The goal is to avoid transactions that result in disagreements and a lack of trust.• The principle of maṣlaḥah, which refers to a shared interest that is backed by the spirit of the Sharīʽah which is beneficial for individuals and the Muslim community at large.A specific type of transaction may be exempted from a general norm based on maṣlaḥah because it has been demonstrated in common practice to assist business.

Sharīʽah Principles Regarding Hybrid Products
The fundamental principle in muʽāmalāt is that every transaction is permissible, except if there is Shari'ah evidence to the contrary.For hybrid contracts, there are some ḥadīth which indicate their prohibition.The first ḥadīth, as reported by Mālik (n.d.,Vol. 5,p. 657), disapproves combining a loan contract and a sale contract.Prophet SAW prohibited the contract's merger between the salaf (qarḍ) and the sale and purchase (Arbouna, 2007).However, it is permissible to practice them separately."From 'Amr ibn Shu'ayb from his father's grandfather said: "The Messenger of Allah has prohibited lending money by selling goods; he forbids there are two prices in one sale or selling something that is not yours or reselling something that you have bought while the goods are sold.It has not fallen into your hands yet."The second ḥadīth reported by Aḥmad ibn Ḥanbāl (n.d.,Vol. 2,p. 174) disapproves of two sales in one contract (bayʽtayn fī bayʽah) (Arbouna, 2007).
"Hannad narrated to us, ʽAbdah ibn Sulayman narrated to us from Abū Salamah from Abū Hurayrah said: Rasulullah saw forbade two sales contracts in one sale." The majority of Muslim scholars agreed that any structured product based on a combination of contracts intended to circumvent unlawful transactions, such as ribā, gharar, and maysir, is unacceptable (Mihajat, 2015).Third, ḥadīth prohibits a sale that is circumscribed with a condition.Al-Asbahani (1415 AH, p. 267) reported another ḥadīth that states that the Prophet has prohibited a sale that is circumscribed with a condition (bai wa shart) (Arbouna, 2007).From the above-referenced ḥadīth, several principles need to be observed while applying hybrid contracts in Islamic banking products 1-Permissible Contract in Sharīʽah Principles Each contract should be permissible before and after being combined.According to AAOIFI (2017), the law of multi-contract sometimes differs from that of the contracts that make up the multi-contract.Combining many contracts into a single transaction is legal as long as each is legal.This is because the general teachings and directives of Sharīʽah recognise freedom of contracting and honouring commitments in principle unless such contracts and commitments violate Sharīʽah rulings (Bank Negara Malaysia, 2010).Combining contracts should not include circumstances where Sharīʽah expressly prohibits it, such as combining sale and financing in one contract.
2-Independent contract.Each contract should have its own set of principles as well as its own set of criteria, goals, and obligations (Arbouna, 2007).Ibn Taymiyyah suggested that two contracts with two different values may be combined.According to al-Shāṭibī, the prohibition of combining contracts in rare instances arises from the fact that the act of combining might occasionally result in Sharīʽah prohibitions that do not apply when the combined acts are performed individually.Combining sale and lending, marrying two sisters, or marrying a lady and her aunt are all examples of acts that become banned when combined, even though they are individually acceptable.
3-The combination must not involve contradictory contracts, Combined contracts should not disclose differences or conflicts regarding underlying rulings and ultimate purposes.Giving someone an asset as a gift and selling/leasing it to him at the same time, or combining Muḍārabah with lending the Muḍārabah funds to the Muḍārib, are all examples of contradictory transactions, or leasing with selling, or currency exchange with Juʽālah, or Salam for the same contract value (i.e.hire-purchase in its traditional form) (AAOIFI, 2017).

4-It should not be used as a trick for committing ribā
The usage of hybrid contracts should not be used as a ruse to conduct ribā, based on the directive of the Prophet Muhammad (PBUH), which indicates the prohibition of bayʽ al-ʽīnah and ribā faḍl (AAOIFI, 2017;Maulin, 2020;Mihajat, 2015).For instance, Contracts combine when they conclude a lending contract which facilitates some other compensatory gains to them, such as including a clause requiring the borrower to provide lodging at his home for the lender or to give him a gift.Combining contracts could be abused by forcing the borrower to make excessive repayments in quantity or quality (AAOIFI, 2017).In a nutshell, it is permitted to have multi-variation contracts in one product and executed in an agreement provided that it is not made conditional to each other and must be aligned with the principles of al-Sharīʽah.

Hybrid Contract in Islamic Banking Products and Services
In general, the products and services of Islamic banks can be classified into three main categories: (1) Term deposit, i.e. sale-based, major components of the balance sheet of Islamic banks, such as house financing, car financing, personal financing and credit card facilities which are almost based on hybrid or combination of contracts; (2) Investment account, i.e. partnership-based, e.g.mushārakah and muḍārabah; and (3) Saving account through fee-based contracts, e.g.wakālah contract where Islamic banks as agents t manage some services.Hybrid-based contracts such as ijārah muntahiyah bi al-tamlīk, ijārah mawṣūfah fī zimmah, tawarruq, mushārakah mutanāqiṣah, tawaruq and wakālah bi istithmār in banking products and services have been expanded by Islamic financial institution beyond the traditional contracts like murābaḥah, mushārakah and muḍārabah, According to AAOIFI (2017), a hybrid contract or combination of contracts is a process between two or more parties and comprises the simultaneous conclusion of more than one contract.Multi contracts (al-ʽuqūd al murakkabīin) are a collection of various contracts combined into a single contract jointly or reciprocally, with all rights and obligations viewed as legal consequences of the deal (Maksum, 2018).The majority of Hanafi, some Maliki, and Shafi'i schools, as well as Hanbali schools of law, are of the opinion that the hybrid contract is valid and permissible according to Islamic law and judged in the light of its components (Mihajat, 2014).This point of view is based on the Islamic legal maxim, which states the origin of the contract is permissible and legitimate, not forbidden and unlawful since there is no explicit evidence to prove otherwise unless the combining of two contracts resembles ribā, as a combination of qarḍ with another contract, due to the prohibition of merging the contract of sale with qarḍ (Mihajat, 2014).According to AAOIFI (2017), hybrid contracts or multi-variation contracts can be made with any of the following forms: (1) combining more than one contract without imposing any of them as a condition on the other and without prior agreement to have them as conditions in the other; and (2) agreement to conclude the deal through any of different contractual forms as will be finally decided in the future.Almost all Islamic banking products and services offer hybrid contracts.The following are the most common hybrid contracts used in Islamic banks:

1.Bayʽ Bithaman Ajil (BBA)
Although the application of bayʽ bithaman ajil (BBA) for various Islamic banking products has decreased in recent years, it is still utilised in Malaysia.BBA is simply a method of payment, i.e. deferred payment, which is applied to all kinds of sales where the payment is either by instalment or lump sum payment at the end of the fixed period.The Islamic banking practice in Malaysia tends to confine BBA to long-term asset financing while murābaḥah to short and medium-term financing.A BBA contract is a deferred payment sale contract that customers apply to finance the properties they want in-house financing products.This type of deferred payment transaction is also known as a credit sale, or bayʽ al-taqsit, bayʽ bi al-'ajal, or bayʽ al-mu'ajjal in Islamic jurisprudence (Engku Ali, 2009).According to Oseni et al. (2019), Property Purchase Agreement (PPA) and Property Selling Agreement (PSA) are the two unique contracts utilised in a typical BBA facility for house financing based on the application side of this Islamic Finance Transaction (PSA).The bank buys the property from the customer in cash under the PPA.This payment is the actual amount the customer is expected to pay the original property owner.Conversely, the PSA is a contract in which the bank sells the same property to the customer for a profit and with a deferred payment schedule.As said above, BBA is used for purchasing property (either home financing or commercial properties) and trade financing products.Nowadays, Islamic banks have weaned themselves from BBA, and it has been replaced by tawarruq arrangement using commodity murābaḥah, where the proceed from the sale of the commodity are used to settle the purchases of houses or commercial properties.

2-Tawarruq
Practitioners in the Islamic banking industry see tawarruq as a necessity because, with its current structure, it provides liquidity management solutions to Islamic financial institutions.Another reason is the need to provide Muslim customers with Sharīʽah-compliant working capital without collateral.Therefore, tawarruq is used as a source of fund products and financing products.Technically, tawarruq is defined by the OIC Fiqh Academy fatwa no.179 as a purchaser (mustawriq) who buys an item on a payment basis intending to sell it for a lower price in order to obtain cash (Abdillah et al., 2020).This scheme has been utilised for a variety of products and services, including deposit and financing products, as well as a source of funds for banks.In this plan, the ʽaqad or multi-variation contracts involved are murābaḥah, musāwamah, wakālah and tawarruq itself.Tawarruq is used to replace the muḍārabah term deposit account in the case of deposit accounts (Ismail et al., 2013).The Islamic Financial Service Act of 2013, which classifies Islamic deposits as principal guaranteed and investment accounts as non-principal guaranteed, resulted in this change (Bank Negara Malaysia, 2013).

3-Combination of Wakālah (Agency) and Kafālah (Guarantee)
In certain transactions, there are instances where one party assumes the responsibility of two contracts simultaneously.However, Muslim jurists generally agree that combining agency (wakālah) and personal guarantee (kafālah) in a single contract is not permissible.This means that the same party cannot act as both an investment agent and a guarantor at the same time.Such a combination is considered contradictory to the fundamental nature of these contracts.Moreover, if a party acting as an agent for an investment provides a guarantee, it transforms the transaction into an interest-based loan, as the additional capital is regarded as ribā.(Elgari (2008).In clause 22.5, as stated in the Kafālah policy document by BNM: "When kafālah is applied with a wakālah, the contracts shall be entered into independently and separately where the effect of one contract shall not be interrelated to the other" (BNM, 2017).

4-Mushārakah Mutanāqiṣah
A partnership contract known as mushārakah mutanāqiṣah involves the transfer of property from one party to another, ultimately resulting in the latter's sole ownership (Samsudin et al., 2015).This type of contract encompasses multiple interconnected agreements, including mushārakah (partnership), ijārah (lease), and al-bayʽ (sale).In the realm of Islamic banking, the waʽd mulzim is often incorporated into this contract (Samsudin et al., 2015).Shuib et al. (2011) assert that the combination of these contracts is permissible as long as each obligation is implemented separately and fully.This contract encompasses various contractual elements within a single transaction, such as joint ownership (shirkah al-milk), sale (bayʽ), lease (ijārah), and grant (hibah).

5-Financing Product Based on al-Istiṣnāʽ al-Muwāzī, Ijārah Mawṣūfah fī al-Zimmah and Ijārah Muntahiyah bi al-Tamlīk
According to Bank Negara Malaysia (2010), based on the concepts of istiṣnāʽ and ijārah mawṣūfah fī al-zimmah, an Islamic financial institution offers a financing solution for houses under construction.The financing procedure begins with the consumer signing a sale and purchase agreement with the developer and paying a deposit equal to 10% of the house's selling price.Following that, the customer will seek a financing facility from an Islamic financial institution based on an istiṣnāʽ contract (istiṣnāʽ muwāzī or parallel istiṣnāʽ), in which the customer will sell the house to the Islamic financial institution based on istisnāʽ contract.The customer will also sign an ijārah mawṣūfah fī al-zimmah leasing agreement for the house, which is currently being built.In this case, the customer agreed to begin paying monthly rent while the property was still being built and gradually purchased the house's shares over time.

Discussion on hybrid products in Islamic Banks
This section focuses on two prominent hybrid products in Islamic banking, namely BBA (Bai Bithaman Ajil) and tawarruq.These products are widely utilized by Islamic banks compared to other hybrid contracts like mushārakah mutanāqiṣah, ijārah muntahiyah bi al-tamlīk, and ijārah mawṣūfah fī dhimmah.Several relevant Sharīʽah issues are highlighted in relation to these products.

1-Issues with BBA and Tawarruq:
Combining a deferred payment sale with an immediate payment sale is an example of merging two sales into a single agreement, known as bayʽ al-'īnah in Islamic law.In Islamic banking and finance, this structure is referred to as a "sell and buy-back agreement" (Arbouna, 2007).The permissibility of such a contract is a subject of debate among Muslim scholars.Some scholars allow Islamic financial institutions to employ this contract, deriving its permissibility from the general principle of al-aṣlu fi al-mu'āmalah al-Ibāḥah (Al-Qarālah, 2014), which means that the default rule in transactions is permissibility.They also cite Quranic support, such as Surah al-Baqarah: 275, where sales and purchases are permitted.According to these scholars, BBA represents a contract of sales and purchases (Azli et al., 2011).However, some scholars do not approve of the implementation of BBA in Islamic financial institutions.They argue that bayʽ bithaman ajil is a variant of bayʽ al-ʽīnah and is based on debt-based financing with elements of the bay' al-ʽīnah contract (Hanafi et al., 2012).This contract is primarily employed to address liquidity needs, where a buyer purchases an item from a seller on a spot payment basis for investment purposes.The buyer subsequently agrees to sell the item back to the seller at a predetermined amount, usually lower than the purchase price.Combining these elements is deemed impermissible in Sharīʽah, as bayʽ al-'īnah is widely regarded as unlawful.This is because the seller sells the item to the buyer at a higher price with a payment plan to ensure buyer liquidity, and then repurchases the item from the buyer at a lower price on a spot basis.The arrangement is intentionally structured in this manner, making it an arrangement for a prohibited loan contract (Muwazir et al., 2017).Additionally, Chong & Liu (2009) argue that a BBA facility lacks a clear profit and loss paradigm.
Here is an example of a BBA transaction: BBA Asset Financing Tawarruq also still becomes an issue in the Islamic banking industry.The classic tawarruq is accepted by most Muslim scholars, according to al-Shanqiṭī (n.d).Classical tawarruq, which may also be referred to as non-organised tawarruq, was largely accepted and regarded as permissible by a wide range of classical scholars from the Ḥanbalī, Shāfi'ī and Ḥanafī schools of thought (Faruq Ruslan et al., 2019).Meanwhile, some scholars from Hanafi and Maliki have put tawarruq under the discouraged practice of Sharī'ah (Alkhan & Hassan, 2019).In this modern day, tawarruq used by the financial institutions in Malaysia has faced criticism amongst modern scholars.Some of them have prohibited organised tawarruq since its scheme aims to obtain cash rather than goods (Asni & Sulong, 2018b).The modern practice of tawarruq has departed from the classical form of tawarruq approved by the overwhelming majority of jurists (Ali & Hasan, 2018).The OIC Islamic Fiqh Academy distinguishes and classifies between the permissible (tawarruq ḥaqqi) and the forbidden (tawarruq munaẓẓam or organised tawarruq), which is widely practised by Islamic banks and is deemed to be synthetic and fictitious as bayʽ al-ʽīnah and trick to circumvent the prohibition of ribā in its 17th session in December 2003 (Mihajat, 2015).BBA (with bay' inah) and tawarruq are considered tricks to impose interest or called ḥīlah, i.e. the customer aims to get liquidity that leads to lending money with interest.This refers to avoiding illegal activity; another reason to use it is that it is a straightforward transaction (al-'Imrâni, 2006).Both of these contracts, however, are contentious hybrid contracts.This contract is considered a high scheme to engage in usury, a remedy utilised by an individual to exit from something prohibited to something permissible."Some Muslim scholars consider the ḥīlah-grounded product development in Islamic finance as a circumvention of prohibited

Islamic Bank
Developer/Seller Customer 3. The Islamic Bank resell the asset to the customer on a deferred payment basis with cost plus markup 1 2 3 2.The Customer sells the asset to the bank, and payment is made on a spot basis.
1. Sale and purchase contract.The customer paid 10% of the price.
interest (Syed & Omar, 2017;Maksum, 2018).If the purpose of ḥīlah is to achieve an unlawful goal by circumventing the Sharīʽah ruling, it would be considered illegitimate.According to Khir et al. (2010), ḥīlah is prohibited if it is to violate the Sharīʽah, either to negate the law of Sharīʽah or to convert it to another law, such as leaving what is required and legalising what is banned, so causing harm to the Islamic norms.Fuqahā' universally agree that ḥīlah is prohibited in this group.The ḥīlah, on the other hand, is permitted if the goal is to accomplish good intents and does not go against Sharīʽah.In this category, most fuqahā' acknowledge the authorisation of ḥīlah.In conclusion, additional hybrid contracts used in Islamic banks, such as mushārakah mutanāqiṣah, ijārah muntahiyah bi tamlīk, and ijārah mawṣūfah fī dhimmah, fall within the good ḥiyāl category.However, tawarruq and bayʽ bithaman ajil are engaged in non-Sharīʽah ḥīlah.
In the practice of tawarruq by Islamic banks, there are three forms of non-Sharīʽah ḥiyāl or ḥīlah observed: 1. Commodity without Intention: In this form, the sale and purchase of a commodity are not intended by the contracting parties.The commodity serves merely as a medium for conducting the transaction.The focus is primarily on obtaining money rather than acquiring the actual commodity (Ajija et al., 2009;Asni & Sulong, 2018b).2. Unclear Ownership: The ownership of the commodity in a tawarruq contract becomes ambiguous.It is not evident who truly possesses the commodity, raising concerns about the validity of the transaction (Ajija et al., 2009;Asni & Sulong, 2018b).3. Commodities as a pretence: In this scenario, the commodities involved in the transaction are not items that the customers actually require.Their primary objective is to obtain money, and the sale and purchase of the commodities are merely a facade or illusion to achieve this goal (Ajija et al., 2009;Asni & Sulong, 2018b).

Tawarruq transaction
Customer/Buyer Pays the price of a commodity to the bank (lump sum or instalment)

Sells commodities to customers on deferred payment basis
Commodity sale (spot price)

Bank
Cash payment for commodity sale Third-Party First: A customer purchases a commodity from a seller (bank) on a deferred payment basis (murabahah-cost plus price) Second: The customer will sell the same commodity to a third party on a spot payment basis (the customer authorises the bank to sell the commodity on his/her behalf).The bank will then credit the proceeds from the sale to the customer's account, and the customer pays the commodity's price to the bank (lump sum or instalment).Standard No. 30 of AAOIFI issued the application of tawarruq is done when the first contract involves purchasing the commodity on deferred, called murabahah or musawamah.The second contract involves selling the commodity to a third party on a cash basis.Another thing that needs to be criticised is the dependence of one contract on another.In practice, BBA and tawarruq in Islamic banks have been regulated.If one contract is not executed, it will affect another contract's occurrence because the contract's purpose is to obtain liquidity.Combining more than one contract is permissible without imposing any of them as a condition in the other and without prior agreement to make them a condition in the other (AAOIFI, 2017).From Malaysian practice, Bursa Malaysia introduced the Commodity Murabahah House, known as Bursa Suq al-Sila', as a platform to assist Islamic financial transactions (Ismon, 2012).Bursa Malaysia introduced and designed Bursa Suq al-Sila' (BSAS) in 2009 to facilitate tawarruq transactions it offers solutions to transact tawarruq based on the actual commodity market.In this BSAS structure, the seller is required to have the commodity first before any sales transaction is made.BSAS allows the buyer to accept delivery of the commodity if the buying position exceeds the selling of the commodity and the trading account is not closed (square off) on the same day.Sharī'ah Advisory Council of BNM, at the 78th meeting dated July 30 2008, has decided that the proposed BSAS operational structure is allowed on the condition that the traded commodities must be clearly and accurately identified and determined (mu'ayyan bi al-dhāt) in terms of location, quantity and quality to meet the characteristics of real transactions.In addition, it is recommended that transactions be done randomly so that BSAS operations are more in line with the characteristics of the original bay' tawarruq.This initiative is an approach to raising issues regarding tawarruq amongst modern scholars who argue the validity of tawarruq.

2-Sharīʽah Analysis
From the previous discussion, we may draw the following conclusion.It is obvious that BBA and tawarruq (organised) are both involved in selling an item or commodity intended by someone other than the contracting parties.For example, in BBA financing, the item sold to the bank by the customer is not the desire of the bank to use.Similarly, in the case of tawarruq, the commodity the bank sells is not the customer's desire.This is against the Sharī'ah concept of buying and selling in Islam, which indicates the intention of contracting parties to own and use the item being sold.Ibn Taymiyyah has divided sales into three groups according to the buyer's intention, namely: "… that he purchases the goods in order to use or consume them such as food, drink and the like in which Allah has permitted in this type of sale.." "… that he purchases of goods in order to trade with them in which case this is a sale where Allah has permitted…" (Ibn Taymiyyah, 1966, p. 431) Other than these intentions, for example, facilitating cash through sale is prohibited.Ibn Taymiyah said: "… then the cause may be dirhams (cash), which he needs, and it was difficult for them to borrow, so he purchases the good on credit (with increased dirhams) in order to sell it and takes its price.Then this is haram according to most Jurists" (Ibn Taymiyyah, 1966, p. 431).Based on this, the contracting parties in BBA and organised tawarruq clearly do not fulfil the objective or intention for which the Shariah initiates the legitimate sale in the first place.However, they intend to achieve illegal objectives that are money or cash, which resembles the loan concept with an increase.It is clear that it contradicts the principle of Shariah.Thus, the element of intention or niyyah is made secondary in applying these two hybrid contracts.The contracting parties have no direct relationship with its actual use, and the underlying asset or commodity is used as an object of sale merely to facilitate the customer's liquidity which is against Sharīʽah.The second point is that both BBA and tawarruq, when applied for financing, are not independent contracts meaning that if one contract in either BBA or tawarruq is not executed, another contract will not occur.In other words, the second contract's occurrence depends on the first contract's occurrence.Thus, we can understand that the first contract is a condition for another invalid contract.In another narrative, some view both contracts as the sale of a forced person, which explicitly violates the Sharīʽah principles concerning the objectives of sale and purchase (Al-Bugha et al., 1992).For example, in the case of BBA, the seller (customer) must agree to repurchase the item sold to the bank.Similar to tawarruq, although the item is not sold back to the customer, the bank will sell the item or commodity to another party on the customer's behalf which has been planned and organised, and this is also violating the real concept of tawarruq.Scholars like Ahmad ibn Hanbal (2012) derived the opinion of disapproving from the narrated hadith recorded by Abū Dāud (1999) as Prophet Muhammad disallowed the sale of a forced person.The third point is that hybrid contracts should not disclose differences or conflicts.In the case of BBA, there is a contradictory transaction whereby the customer who has sold an item to the bank is forced (direct or indirectly) to repurchase the item at a higher price with a payment plan which has been pre-agreed upon.In Islam, selling an item to a buyer with the condition that the seller needs to purchase it back from the buyer is forbidden.This is because it violates the true nature of selling and purchasing contracts.Another point is that BBA and tawarruq are considered a trick to circumvent riba.It applies when a spot sale precedes a sale by deferred payment.It is a case where in BBA, the customer sells his asset to the bank for cash, after which he will purchase it back from the bank on a deferred payment basis which is higher.In this case, the bank and the customer have satisfied with their needs.The customer obtains the cash while the bank gets some profit.The same also applies in tawarruq, where the commodity is sold to the customer by virtue of a trick to get away from riba.The asset or commodity is not utilised in the same way that a genuine buyer would use it.Therefore, based on Sharīʽah principles, any transaction with that purpose is invalid.Moreover, some scholars forbid tawarruq because mafsadah overwhelms maṣlaḥaḥ.Among the harmful effect of tawarruq is that it leads to the creation of debt whose volume is likely to increase, and it results in an exchange of money at present by providing an additional amount in future.Thus, it seems unfair because of the risk and uncertainty involved, and it could lead to debt proliferation (Ismon, 2012).When Islam predetermined its ruling concerning selling and purchasing, the objective of the prescription is to establish ownership amongst people.However, practising BBA and tawarruq (organised) has eluded such objectives according to some opinions.In this respect, the objective of BBA and tawarruq (organised) is not for ownership; rather, their form is to obtain cash flow for certain parties.In addition to this, it seems that BBA and tawarruq both are embedding hiyal-based contracts, which, according to Syahmi et al. (2021), who stated tawarruq contract consists of two sales and purchase contract is executed to obtain liquidity and not to aim at the underlying asset.Thus, it is apparently clear that both BBA and tawarruq are controversial because both transactions violate some Sharīʽah principles.

Conclusion
The utilization of hybrid contracts is prevalent in a wide range of products and services offered by Islamic banking.However, certain schemes like BBA and tawarruq remain contentious due to their association with the illegitimate practice of ḥīlah.Moreover, in these schemes, one contract becomes a prerequisite for others, creating interdependence among them.The combination of different Sharīʽah contracts into a single scheme within a financial product or service is permissible, as there is no explicit prohibition in Sharīʽah.However, certain Sharīʽah standards must be adhered to when employing multiple contracts.These standards dictate that the individual contracts used must be permissible in Sharīʽah, and when combined, they should retain their independent nature.The combination of contracts should not involve conflicting commitments, and it should not serve as a means to engage in ribā (usury).Therefore, it is imperative for Islamic banks to play a crucial role in ensuring that all relevant guidelines are observed during the development of products, ensuring proper structuring and implementation.Failure to comply with these guidelines may lead to instances of Sharīʽah non-compliance, which can result in non-compliant financial outcomes.In summary, while the combination of contracts is permissible in Islamic banking, it is essential to follow the prescribed guidelines to ensure compliance with Sharīʽah principles.Islamic banks must exercise diligence in product development and adhere to the relevant standards to avoid noncompliance with Sharīʽah requirements.