Bay al-dayn refers to the sale of debt in Islamic finance. It involves the sale and purchase of a quality debt, either to the debtor or a third party. There are differing views among Islamic scholars on whether debt can be sold to a third party. Proponents argue it can be allowed subject to certain conditions to avoid risks like gharar. Critics argue the sale of debt to non-debtors is prohibited due to issues like selling something one does not possess.

1. DEFINITION
Bay al-dayn is an
• Arabic term for “sale of debt” as
• Originated from two words;
• bay’ which means sale, while
• dayn means debt.
• As far as bay al-dayn is concerned, it simply means a sale and purchase
transaction of a quality debt.
To be specific, it can be defined as the sale of debt according to
fuqaha as a type of a sale contract in which the creditor sells his
payable right upon the debtor either to the debtor himself or to
a third party (Moustapha, 2001).

2. BASIC PRINCIPLE
The selling of debts is
• to avoid the occurrence of riba between two debts and also
• to avoid any kinds of gharar and makhatara which may arise at the level of
inability of a buyer from possessing what he has bought as it is not permitted
that the buyer sold before actual receipt of the purchased item.
On 21st August 1996, The Malaysian Securities Commission
Shariah Advisory Council passed a resolution unanimously agreed to
accept the principle of bay al-dayn as one of the concepts for
developing Islamic capital market instruments. This was based on
the views of some of the Islamic jurists who allowed this concept
subject to certain conditions for instance there is a transparent
regulatory system in the capital market to safeguard
the maslahah (public interest) of the market participants.

3. CLIENT/ BANK
CUSTOMERS THIRD
PARTY
Sukuk -Investment

4. SELLING
DEBT WITH
CASH
TYPES OF
SELLING
DEBT
SELLING
DEBT FOR
SALE

6. i.Example sell debt with cash;
(a) Example of debt trading in cash to the debtor
An example is the creditor to sell debt (incurred by the debtor) of the debtor
with a long cash price.
(b) Examples of debt with cash sale to third parties
An example would be like X says to Y, "I'm selling my debt incurred by Z to
you with cash so price '.
ii. Examples of debt for sale;
Sell ​one debt can also occur if the debt had been sold to the debtor or to a third
party.
(a) Examples of debt for sale to third parties
Examples of debt for sale to third parties is such that A says to B, I'm selling 10
kilograms of grain to be debt obligations of C of I to thee with a value of RM10 to
be paid by you to me in grace. In this way scholars described as "bai 'al-dayn bi
al-dayn".

7. b) Example sell debt for the debtor
An example would be like a buy wheat from B to be delivered after a month
with a price of RM10 to be paid after 2 months. Sell ​this debt as named also
as "ibtida' 'al-dayn bi al-dayn".
Another example which means debt for sale A book is like buying a
commodity in regards of B for RM1, 000 cash. Goods will be delivered
within a year. Upon reaching the handover, B tells A that the product
ordered can not be met. Then B says to A, "I sold them to the ordered
goods to a particular period '. This method is also called a "faskh al-dayn bi
al-dayn" because the first debt incurred by the debtor has been settled by
the debtor to incur debt in lieu of a second.

8. Maliki Mazhab
•The Malikis allow bay al-dayn subject to certain conditions as follows:
•Expediting the payment;
• Debtor present at the place of sale;
• Debtor confirms the debt;
• Debtor belongs to the group that is bound by law so that he is able
to redeem his debt;
• Payment is not the same type as dayn, and it fit so, and the rate
should be the same to avoid riba;
•The debt cannot be created from the sale of currency (gold and
silver) to be delivered in future date;
• The dayn should be goods that are saleable even before they are
received. This is to ensure that the dayn is not of the food type which
cannot be traded before qabadh occur; and

9. PILLARS OF
BAY AL-DAYN
* Seller (bai ')
* Buyer (Jupiter)
* Objects / items (Mabi `)
* Price (tsaman)
* Ijab qabul (sighat)

10. SHARIAH RULE
 According to several Malaysian scholars whom accept Bai Al Dayn as a valid
instrument under the Sharia’h, “Bai Al Dayn means a sale and purchase transaction of
a ‘quality debt’ i.e. the default risk of the debtor is low and the debt must be created
from a business transaction that conforms with the Sharia’h and Bai Al Dayn can be
either monetary or a commodity such as food or metal. Therefore, according to these
certain scholars, “Bai Al Dayn can be defined as a sale of payable right either to the
debtor himself or to any third party.” (The Law and Practice of Islamic Banking and
Finance (2003) by Dr. Nik Norzrul Thani; Mohamed Ridza Mohamed Abdullah; Megat
Hizaini Hassan) This type of sale is usually for immediate payment.

11. The sale of such a payable right to a third party is a subject of
disagreement amongst the scholars. “According to most of the
Hanafi, Hanbali and Shafi jurists, the sale of debt to a non-debtor or
third party is prohibited based on the forbidden sale of Gharar [v]
(uncertain or obscure goods), sale of Al Kali Bil Kali[vi], and the sale of
a thing which the seller does not possess. However, there are
exceptions to this rule.” (The Law and Practice of Islamic Banking and
Finance (2003) by Dr. Nik Norzrul Thani; Mohamed Ridza Mohamed
Abdullah; Megat Hizaini Hassan)