---
title: "What is Bay al-inah (sale and buy-back)? | IslamicOpenFinance™"
description: "Selling an asset on deferred terms and buying it back from the same buyer for a lower spot price. Standard setters disagree on it."
url: https://islamicopenfinance.com/glossary/bay-al-inah/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Shariah fundamentals](https://islamicopenfinance.com/glossary/#fundamentals)

Shariah fundamentals

# Bay al-inah (sale and buy-back)

Selling an asset on deferred terms and buying it back from the same buyer for a lower spot price. Standard setters disagree on it.

Bay al-inah is a pair of sales in which a party sells an asset for a deferred price and buys it back from the same buyer for a lower cash price, so the buyer ends up with cash and a larger debt. AAOIFI's standard on tawarruq distinguishes it from tawarruq, where the asset is sold to a third party, and describes inah as strictly prohibited because it is a device for riba. Bank Negara Malaysia's Shariah Advisory Council, in resolutions compiled in its second edition, accepted bay al-inah subject to conditions. Products built on it therefore depend on which authority governs them.

## Sources

- [AAOIFI Shari'ah Standards, English edition (full text, PDF): Shari'ah Standard No. 30, Monetization (Tawarruq), definition and distinction from inah](https://aaoifi.com/wp-content/uploads/2017/12/Shariaa-Standards-ENG.pdf)
- [Bank Negara Malaysia, Shariah Resolutions in Islamic Finance, second edition, 2010: Bai\` \`inah resolutions of the Shariah Advisory Council](https://www.bnm.gov.my/documents/20124/9198675/shariah_resolutions_2nd_edition_EN.pdf)

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

## Related terms

[**Tawarruq** Buying an asset on deferred payment and selling it to a third party for cash, to raise liquidity. Its organised form is contested.](https://islamicopenfinance.com/glossary/tawarruq/) [**Riba** An increase over principal that Shariah prohibits: extra stipulated on a loan, or an unequal exchange of certain like-for-like goods.](https://islamicopenfinance.com/glossary/riba/) [**Murabaha** A sale at cost plus an agreed, disclosed profit; the seller must own the asset first. Payment is often deferred in instalments.](https://islamicopenfinance.com/glossary/murabaha/) [**Commodity murabaha** Interbank and treasury deals in which commodities are bought and sold on deferred payment to place or raise short-term funds.](https://islamicopenfinance.com/glossary/commodity-murabaha/)

**Shariah fundamentals**

1. [Riba](https://islamicopenfinance.com/glossary/riba/)
2. [Gharar](https://islamicopenfinance.com/glossary/gharar/)
3. [Maysir](https://islamicopenfinance.com/glossary/maysir/)
4. [Shariah](https://islamicopenfinance.com/glossary/shariah/)
5. [Fiqh al-muamalat](https://islamicopenfinance.com/glossary/fiqh-al-muamalat/)
6. [Maqasid al-Shariah](https://islamicopenfinance.com/glossary/maqasid-al-shariah/)
7. [Riba al-nasiah](https://islamicopenfinance.com/glossary/riba-al-nasiah/)
8. [Riba al-fadl](https://islamicopenfinance.com/glossary/riba-al-fadl/)

[All 221 terms](https://islamicopenfinance.com/glossary/)