Sharia rulings of Bill Discounting and its Alternative

Uzair Usmani belongs to a well known family of Pakistan, the usmani family and is graduated from DARUL ULOOM Karachi as Sharia scholar and conducted his thesis based research in the field of Islamic treasury operations.He is currently providing his services as sharia advisor in following organizations:1 Meezan bank. 2 Iqra Islamic Trust3 AAOIFI

With the growing economic industry, the importance of bill discounting is not obscured any more. It is undoubtedly one of the most important tools of trade financing. Now it has become very easy for importers and exporters to sale any product to a complete stranger anywhere in the world and get the bill against it discounted before its maturity date. That is why this tool is in the practice of all conventional banks. But regarding to sharia rulings its prevailed practice in conventional banks is not sharia compliance as this transaction consists of debt sale and interest. But due to it's vitally need, Islamic sharia jurists have stepped forward with its different alternatives based on Murabaha, Wakalah, Musharkah and Bai Salam in currency. In this article I have covered the causes behind the sharia rulings of prevailed bill discounting in conventional banks and addressed the Bai salam as an alternative in currencies and its executive model in Islamic banks. Furthermore I have discussed the different opinions of modern scholars regarding these issues. Keywords: bill discounting, letter of credit, alternative of bill discounting, bai salam in currency