A SharīʿAh Analysis on MRTT Coverage for Conventional Housing Loans: The Malaysian Case

Said Adekunle Mikail, Muhammad Ali Jinnah Ahmad, Mohamad Fairooz Abdul Khir, Hafas Furqani


This paper aims to provide a Sharīʿah analysis of MRTT coverage for conventional housing loans, an issue that has posed unresolved and pressing Sharīʿah issues in the takāful industry for about a decade. The paper employed textual analysis approach throughout the paper. It analyses the primary sources of the Sharīʿah, namely the Qur‟ān and the Sunnah, along with secondary materials such as the resolutions of the SAC of BNM, AAOIFI‟s Sharīʿah Standards, resolutions of the Fiqh Academy of the Muslim World League, books, journal articles and conference proceedings. It also includes critical analysis of the diverse views of contemporary scholars, including Sharīʿah bodies and individuals, on the permissibility and impermissibility of MRTT coverage for conventional loans. It finds MRTT to be tailor-made for the repayment of the outstanding debt that results from financing provided by an Islamic or conventional bank. The paper views that to invoke necessity (ḍārūrah/ḥājahmutaʿayyinah) to cover conventional housing loans; the necessity should be proved beyond doubt and as prescribed in Sharīʿah. Thus, a transaction structured on the basis of the rule of necessity should not be held permanent.

Aus. J. Isla. Finan. & Busi. Vol 2(1), April 2016, P 67-87


Mortgage Reducing Term Takāful (MRTT); Mortgage Reducing Term Assurance (MRTA); Conventional housing loan; takāful industry

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