 In this module, we would further look at the concept of Tawarruq and its application in Islamic banking and finance. We have already given one example of Tawarruq in our previous module, and this module would be an extension of that one. When we looked at the structure of a Tawarruq-based personal finance facility, many of you might have got this impression that this was a very lengthy process. Lengthy in the sense that the bank is buying a commodity from a commodity broker one, then selling it to the customer and the customer then selling it to another commodity broker and it may take ages. Actually, that isn't the case. Tawarruq is an instant product and in this world of the IT revolution, the technology allows Islamic banks to execute Tawarruq in a matter of minutes or in some cases if the bank is very efficient in a matter of seconds. So, the complicated nature of Tawarruq on the paper should not discourage Islamic banks and other institutions involved in Islamic banking and finance to use Tawarruq. Actually now it is the ease of use of Tawarruq electronically that this has become a preferred choice of many Islamic financial institutions including Islamic banks. However, I must caution that the critics of Islamic banking and finance still consider Tawarruq to be a bad Islamic product. Let us relook at the structure. Customer is in need of cash. It goes to an Islamic bank and Islamic bank buys the commodity X from a commodity broker one and sells it on to the customer on a murabha basis or on a deferred payment basis. The customer then sells it in the market through another broker to generate some cash. So, there is a movement of commodity from here to there. So, this is the direction of the movement of the commodity. The price, the money actually moves from here to there and then it moves from here to there. Eventually it moves from the customer to the Islamic bank with some profit. Actually something happens in between and we called it undisclosed activity. As commodity broker one and commodity broker two they are in the same market. They are listed on the same exchange and hence there is a possibility, undisclosed possibility that commodity broker one actually gets the commodity from maybe broker two. But we do not go into those details. What I am trying to say is that the commodity movement takes place like this and the price actually goes from here to there to there. Now in case of Tawarruq a number of steps are involved. First thing of course like any other product is making the application. When I need cash I would go to an Islamic bank and would fill in the application form to get this personal finance facility. If my application is approved I would be then offered this facility. The bank may ask me to open an account with it because having an account with the same bank would help the bank to execute the whole thing rather efficiently. So if I am not already an account holder with the bank I might be asked to open an account. So for that I will have to fill in the account opening application form. Then there is execution of purchase of commodity by the bank from the vendor and of course then the bank would be selling that commodity to me to the customer on deferred payment basis. So one, two, three, four, five. These steps can take place very quickly. In the days of COVID if someone cannot go to a branch you can do it over the internet. You can call the bank or through any other electronic means. In fact some Islamic banks are offering this kind of services now through WhatsApp facilities as well. Then the sixth step is execution of sale of commodity by customer. Once I have bought the commodity I would like to sell it to our commodity broker in our example commodity broker too. Once that happens the funds are transferred into my account and of course afterwards I would have to start paying the amount of debt in monthly installments. The whole transaction may take a few minutes. If I go to an Islamic bank offering a Tawarrukh based personal finance facility I just go to this relationship manager. The relationship manager would ask me to fill in the form which would be probably three minutes, two minutes. Once I have filled in the application form while sitting there in front of his computer. The relationship manager would ask the commodity manager, commodity trade manager within the bank to execute this transaction with the commodity broker one. The amount would be known and this would be done electronically through the computer in a matter of less than a minute. Then the second transaction which is the sale of the commodity to me that would take place very quickly as well. Now Islamic banks are using tabs. All these things would be taking place on the tab with my signatures. And end result would be that I would be involved in a few commodity trades but the end result, the final result would be I would be having access to this cash which is very badly needed.