Bay al-Sarf
Islamic contract rules governing the simultaneous, spot exchange of currencies and precious metals.
Detailed Definition
Bay al-Sarf is the specialized contract in Islamic law governing the trade of money for money, or gold for silver. Under Shariah rules, hand-to-hand delivery (Taqabud) must occur immediately at the spot price to prevent counterparty risk, speculation, and Riba.
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Related in Islamic Finance
Riba (Usury/Interest)
Unjustified, exploitative gains or predetermined interest charged on loans, prohibited in Shariah.
Ijarah (Islamic Leasing)
A Shariah-compliant leasing agreement where the bank purchases an asset and leases its usufruct to the client.
Mudarabah (Trustee Financing)
A partnership where one party provides 100% of the capital while the other provides managerial expertise.