The emergence of tawarruq in modern Islamic financial institutions (IFIs) goes back to the year 1421 Heejra/2000 AD in the Kingdom of Saudi Arabia from the Saudi British banks and later AlJazira Bank in 2002. It was later practiced by banks in the Gulf region and other IFIs. Tawarruq, also referred to as commodity murabahah or monetization, has gain popularity in the IFIs; it has been widely used to structure various financial products and liquidity management instruments, such as attracting deposits, financing and structuring govern- ment and corporate sukuk. This is due to its ease of execution and wide acceptability among IFIs and banks. However due to the ever growing controversies and some disapproval of the tawarruq concept, some IFIs have become reluctant to use this structure. Although classical tawarruq is accepted by most Is- lamic scholars as a genuine Islamic contract, organized tawarruq on the other hand have gained serious criticisms to the extent that the OIC Fiqh academy in its 2009 resolution have deemed it impermissible (haram), see appendix.
