Costs in Islamic Home Financing DEBUNKED | Shariah Scholars' Podcast Episode 2

In this enlightening discussion, Mufti Abdul Kadir Barkatulla, a seasoned expert in Islamic finance and jurisprudence, dives into the intricacies of cost distribution in Islamic home financing. Drawing on years of scholarship and real-world experience, Mufti Barkatulla addresses common questions about why Islamic banks assign certain costs, such as insurance, legal fees, and valuation charges, to the customer rather than sharing these expenses.

CHAPTERS
0:00 Introduction
1:54 Why do Customers Pay?
5:08 Mufti Barkatulla's insights
8:00 Shariah Rules on Costs
13:41 Costs in Sales
16:07 Urf and Market Practice
18:14 Costs in Leases
20:41 Regulated practices
23:25 Costs in Diminishing Musharakah
25:20 Costs and Risks
26:34 Confusion in Islamic Finance
32:20 3 Levels of Islamic Finance
34:34 Sufi Banking!

Key Topics Covered:

1. Shariah Perspective on Cost Responsibilities
Explore the Islamic legal framework determining which costs should be borne by the customer versus the financier. The scholars sheds light on the roles of Tasleem (delivery) and Muqtadha al-Aqd (contractual obligations) in defining these responsibilities.

2. Commercial and Practical Reasons
Understand why, from a practical and commercial perspective, costs like insurance and legal fees are typically borne by the customer. Learn about benefits such as competitive pricing, transparency, and administrative efficiency, and how these factors impact the customer and the bank.

3. Guidance from Classical Fiqh

The scholars discuss classical Fiqh and how it can help understand contemporary practices.

4. Future of Equitable Cost Distribution in Islamic Finance

Gain insight into a vision for a fairer approach to cost-sharing in Islamic finance. What steps could Islamic finance take to achieve an equitable and Shariah-compliant structure, ensuring fairness for customers while maintaining compliance with Islamic principles?