Glossary
Ibra'
A rebate: the bank giving up part of what you owe, usually when you pay early.
إبراءibrā'
Ibra' is the waiver of a right to claim. In Islamic finance it is the rebate a bank gives a customer who settles a debt before it is due. It matters enormously on tawarruq, inah and murabahah cards, because on those the full marked-up debt is fixed at the start, so the only way early settlement saves you money is if a rebate is given. Bank Negara's SAC addressed the risk that this was left to the bank's discretion and required the terms and conditions on ibra' to be incorporated into financing agreements so that customers know their entitlement.
Related terms
MurabahahA sale where the seller tells you what the goods cost and what profit is being added, and you pay later.TawarruqBuying something on credit and selling it on for cash, so you end up with money now and a bigger bill later without paying interest.Bai' al-InahSelling something to someone on credit and buying it straight back for less cash, so they get money now and owe more later.DaynA debt: money you owe to somebody.
Sources
- Bank Negara Malaysia, Shariah Resolutions in Islamic Finance, 2nd edition, items on Ibra' in Islamic Financing