A form of tawarruq (Islamic monetization) which is sought per se as a mode of investment or financing, rather than as a last resort liquidity source. Under this structure, tawarruq is used as a means of mobilizing liquidity like any other modes (e.g., mudaraba, investment agency (wakalah bil istithmar), sukuk, investment funds, and so on). In principle, shari’a doesn’t recommend the use of tawarruq as such, and only allows it as a last resort when an individual or institution faces the danger of a liquidity shortage that could badly affect his/its very livelihood (in case of an institution, the flow of its operations).
The pre-arrangement involves the organized process of purchasing an item from some party (a bank, for example) on a deferred payment basis and then selling it immediately to a third party in pursuit of cash.
This is known in Arabic as tawarruq muntazzam.
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