The Core Permission
The Quran (2:275) distinguishes: “God has permitted trade and forbidden usury.” The scholars derived from this that charging a higher price for a deferred payment — in a genuine sale of a good — is permitted (bay’ bi’l-ajal), while charging more for a pure money loan over time is prohibited (riba al-nasiah).
The key distinction: in a bay’ mu’ajjal, what is being transacted is a good (a house, a car, merchandise). The higher price reflects the seller taking on the risk of not receiving payment immediately. In riba, what is being transacted is money — and money-for-more-money-over-time is the definition of prohibited riba.
The Maliki Dissent
The Maliki school historically raised concerns about bay’ mu’ajjal: if the seller and buyer then agree to immediately re-purchase the good for a lower cash price, the transaction collapses into the equivalent of a loan with interest (bay’ al-‘ina). The Maliki school was therefore suspicious of deferred payment sales when they appeared to be used as riba disguise devices.
The contemporary Maliki-influenced AAOIFI standards have specific screens for this concern.
Modern Applications
Modern Islamic finance extensively uses the bay’ mu’ajjal structure:
- Murabaha with deferred payment: The bank buys the asset and sells it to the client at a disclosed markup, payable in installments
- Installment sales of consumer goods, vehicles, and real property
- Sukuk structures that involve deferred payment obligations backed by real assets
See also: Fiqh Al Bay Al Salam, Fiqh Al Murabaha, Fiqh Al Musharakah, Fiqh Al Ghurm Wa Ghanm, Fiqh Al Hiyal