Review of islamic law against execution of collateral auctions on islamic banking institutions in Aceh

Muhammad Fadhli, . and Ahmad Azrin, Adnan and Mohd Sadad, Mahmud (2018) Review of islamic law against execution of collateral auctions on islamic banking institutions in Aceh. In: The 1st Aceh Global Conference (AGC) 2018, 17 Oct 2018, Banda Aceh, Aceh.

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Abstract

This article discusses the review of Islamic law quoted from jurists’ opinion and legal experts on the use of auction trading theory in collateral sale. Every financial transaction in Islamic banking required a guarantee. It is intended to save bank funds if the customer defaults. Islamic banks, based on constitutional act Number 4 of 1996 about underwriting rights, have the right to confiscate the guarantees of customer who has reached the due date without intention to pay. However, in the implementation, the bank cannot carry out the parate execution to make direct sales. The banks must take long formal procedures to disburse funds from customer guarantees and often meet various obstacles. This article will analyze normatively and empirically about the bail auction guarantees implementation on Islamic banking in Aceh based on the Islamic law concept from the Alquran, Hadith, and the scholars’ Ijma’. Although it still uses conventional law, in the auction rules, the implementation of guarantees applied to Islamic banking has adopted many Islamic laws. however, in the practice, there are still many problems arise from the Islamic law scope which uphold the philosophy of maslahah and the concept of justice.

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