Malaysia quietly rebuilt every Islamic credit card in nine months

What bai' al-inah was, and why it was contested

In a bai' al-inah arrangement the bank sells you an asset on deferred payment at a marked-up price, then immediately buys the same asset back from you for a lower cash price. You end up with cash now and a larger debt later. The asset never really goes anywhere.

Critics argue that is a loan with interest wearing a costume, because the sale exists only to produce the financing and both parties know it. AAOIFI and the majority Gulf position reject it. Malaysia's Shariah Advisory Council historically permitted it, which is why Malaysian Islamic finance developed along a different line from the Gulf for decades.

That divergence was one of the genuine fault lines in global Islamic finance, and Malaysia has now moved off it for cards.

The conversion timeline

Then the regulator closed the door

Bank Negara Malaysia's policy document on credit card-i, reference BNM/RH/PD 028-141, was issued on 19 December 2025, in the middle of the conversion wave.

Its section on approved Shariah concepts recognises exactly two: tawarruq and ujrah. Bai' al-inah is absent. A separate provision requires the bank to obtain BNM's approval before changing the Shariah concept of a card.

Read together with the timeline, this looks less like six banks independently reaching the same conclusion in the same quarter and more like a coordinated migration ahead of a rule change.

Is tawarruq actually better?

It is more widely accepted internationally, which matters if you care about your card being recognised as compliant outside Malaysia. But it is not uncontested.

The version banks use is organised tawarruq, where the bank arranges both the purchase and the onward sale, usually through a commodity platform. Critics inside Islamic finance argue that when the institution organises both ends, the commodity trade is a formality and the outcome is again a cash loan at a markup. That objection is serious and it has been made by senior scholarly bodies.

So the honest summary is that Malaysia has moved from a structure most of the world rejects to one that most of the world accepts but a substantial minority still criticises. That is progress rather than resolution.

The one issuer that did something different

HSBC Amanah is the only Malaysian issuer in our data still using ujrah, a straightforward service fee rather than a commodity sale. It is arguably the cleanest of the structures, because it does not require a trade to happen at all.

Its own documents are not entirely consistent about this, which we have flagged on the relevant card pages rather than quietly resolved.