"Islamic Finance Researches" (IFR)
A Jurisprudential Analysis of Repurchase Agreement (Repo)
Document Type : Science - Research (Islamic Finance Jurisprudence)
Authors
1 Assistant Professor, Department of Jurisprudence and Fundamentals of Law, Imam Sadiq University, Tehran, Iran
2 Researcher of Rushd and Development Center &, PhD Student, Islamic Studies and Financial Management, Islamic Studies and Management Faculty, Imam Sadiq University, Tehran, Iran
Abstract
The main tool of open market operations is Repo. By this the seller (e.g. a commercial bank) sells the bonds to the customer (e.g. the central bank) in exchange for a price, and the customer promises to repurchase the same bonds at maturity. In this article this tool has been jurisprudentially analyzed in terms of theory and implementation. In terms of theory, four dubious items, namely bay’al-ainah (credit sale), the condition discordant to contract requirements, the incompatibility of the apparent will with the real will, and two sales in a single sale have been examined, and under each, the various perspectives of previous research were analyzed. In terms of implementation, the decision of the Jurisprudential Council of the Central Bank of the Islamic Republic of Iran was analyzed and reviewed. The findings, obtained by a descriptive-analytical method, show that in terms of theory and proof, among the four mentioned dubious items, only the complication of being discordant to not generally accepted contract requirements (inclusiveness of particular accident under the contract requirements) is applicable to “repo’, and the other dubious items have solutions. But according to the generally accepted stance, there is nothing wrong with it. The problems introduced by the researchers can be answered. Thus, the “repo” is by nature different from credit sale and two sales in a single sale, and the apparent will is the same as sale according to Jurisprudential Council, and the principle is the conformity of the apparent will with the real will, and the condition of repurchase is contrary to the contract generality requirement and is not void. In terms of implementation and proof, several points should be considered, the most important of which is the elimination of transaction parties’ assumptions due to the continuous exercise of the transaction authority in repurchase agreement in accordance with Sharia.
Keywords
Al-Hadaiq al-Nadrah in the laws of al-Atrah al-Tahirah. (In Persian).
Al-Ruda al-Bahiya in the Description of al-Lama' al-Damashkiyyah (Volume 3), Qom: Al-Davari School. (In Persian).
Volume 11, Issue 2 - Serial Number 22
May 2022Pages 513-540
- Receive Date: 20 February 2022
- Revise Date: 18 August 2022
- Accept Date: 03 September 2022