Competitive value proposition of BBA home financing

Competitive value proposition of BBA home financing

By Dr Hanudin Amin

Bay bithaman ajil (BBA) home financing refers to a house sale agreement involving an Islamic bank and a homebuyer in which the latter sells the house to the former at cost, later the former will resell it to the latter at premium. The gap between premium and cost is the bank’s profit. The homebuyer will service the instalment on a monthly basis or deferred payment until the completion.

XBC Bank (not real name) in Malaysia, for instance, has reported a small diminution in its BBA home financing segment. It was reported that the total financing reimbursed was MYR2,596 million and MYR2,572 million for 2015...