Bay’ al-Inah

This entry focuses on the contentious bay’ al-inah contract, a two-party sale and buyback structure that generates cash flows that resemble a loan structure. Bay’ al-inah is a contract that involves a seller selling and buying back assets. In this arrangement, a seller sells an asset to a buyer for cash and then buys it back on a deferred payment basis at a higher price than the cash price. It can also be used when a seller sells an asset to a buyer later on a deferred basis.