Legal Analysis of Conversion of Al-Ijarah Al-Muntahiya Bi Al-Tamlik (IMBT) Financing into Mudharabah Financing Based on Saddu Al-Dzari’ah Perspective

Attachment III of POJK Number 29/POJK.03/2019 concerning Quality of Earning Assets and Establishment of Allowance for Elimination of Earning Assets for Islamic Rural Banks states that financing restructuring can be done in several ways, one of them by using financing conversion. The focus of this research discussion is only on the conversion of IMBT financing into Mudharabah financing.The purpose of this study is to analyze the legal validity of converting IMBT financing into mudharabah financing as set out in Attachment III of POJK No: 29/POJK.03/2019 concerning Quality of Earning Assets and Establishment of Allowance for Elimination of Earning Assets for Financing Shari’ah Banks for people based on Sadd al-Dzari’ah perspective.This research is using normative legal research with a statue approach and evaluative nature. The process of converting IMBT to Mudharabah will caused several risks for both customers and banks. The risks that will be experienced by the customer are as follows: the cost of changing the financing process, losses on asset impairment, the end of the wa’d in the ijarah agreement such that the customer cannot own the ijarah asset at the end of the lease period, the customer experiencing bankruptcy after conversion, and the customer required to return all capital to the bank as sahib al-Ma’al. Meanwhile, the risks that will be experienced by the bank are as follows: customers who have no potential and have no business prospects, changes in rental margins from IMBT which are fixed and determined from the beginning to return on Mudharabah which are not fixed, mudharib business losses that are not due to defaults so that must be borne by the sahib al-Ma’al, decrease in the value of the assets used as business capital so that the profit sharing also decreases, the customer going bankrupt after the conversion, and the bank being at risk of bearing all the losses and losing all of its capital. Therefore, the rule can be summed up as concerns regarding the conversion of IMBT to Mudharabah cause casualties and may result in prohibited conversions.