Salam and Parallel Salam: Bridging Tradition and Modernity in Islamic Finance and Pakistani Legislation

السلم والسلم الموازي:جسر بين التراث الفقهي والتنظيمات القانونية الباكستانية

Abstract

This study explores the concept of Salam and Parallel Salam contracts in Islamic jurisprudence and their applications in contemporary Islamic finance. Salam is a forward contract where the buyer pays the price upfront, while the seller delivers a specified product at a future date. Parallel Salam, on the other hand, involves two separate but independent Salam contracts to fulfill obligations from a primary Salam agreement. The research examines the definition, pillars, and conditions of these contracts based on Islamic jurisprudence, analyzing their legitimacy and relevance in modern financial transactions. Furthermore, it compares the Sharīʻah standards established by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) with the regulatory framework in Pakistan, highlighting similarities, differences, and practical implications. The findings reveal that the Pakistani regulatory framework largely aligns with Sharīʻah standards, offering a robust foundation for Islamic financial practices.