Fundamental of Islamic Banking - Other Services

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Fundamental of Islamic Banking - Other Services Provided by Islamic banks

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Fundamental of Islamic Banking - Other Services

  1. 1. ISLAMIC BANKING AND FINANCE Mahyuddin Khalid emkay@salam.uitm.edu.my OTHER SERVICES
  2. 2. CONTENTS  AGENCY ( AL-WAKALAH)  GUARANTEE (AL-KAFALAH)  COMMISSION (JU’ALAH)  FEE (AL-UJR)  REMITTANCE (AL-HIWALAH) 2
  3. 3. AGENCY BASED ON AL-WAKALAH  Definition of Wakalah:  The appointment of someone to take over the appointer’s affairs on his/her behalf for the purpose of accomplishment of certain tasks  Wakalah implies a kind of delegation by a person of his business to act on his behalf.  It is lawful if a person appoints another as his representative for selling or buying, letting or hiring, giving or taking a pledge for depositing or receiving a gift, for safe keeping, for making a compromise, and for giving an acquaintance and for making an admission etc. 3
  4. 4. AGENCY BASED ON AL-WAKALAH  Pillars Of Wakalah  Wakil - The authorized agent, representative, proxy, trustee  Muwakkil - Authorizer, mandatory, client, principal  Muwakkal Bih - Things or subject matter that is being entrusted for, or the business deals involved  Sighah - Ijab (Offer) and Qabul (Acceptance)  Types of Wakalah  Wakalah Mutlaqah (Unlimited Agency/ Unrestricted Wakalah)  A Wakalah contract that is not restricted to any conditions except for those that are permitted in Islam  Not confined to certain circumstances or time limit.  Wakalah Muqayyadah (Limited Agency/ Restricted Wakalah)  An Wakalah contract that is restricted or confined with certain conditions that are legitimized by Islam  Bounded by special circumstances or time limit 4
  5. 5. AGENCY BASED ON AL-WAKALAH Muwakkil. (Authorizer, mandatory, clie nt, principal) Muwakkal Bih (Things or subject matter) Wakil (authorized agent, representative, pro xy) Qabul (Acceptance) Ijab (Offer) 5
  6. 6. GUARANTEE BASED ON AL- KAFALAH  Definition of al-Kafalah:  The pledge given by the guarantor/surety (al- kafil) to a creditor (al-makful lah) on behalf of the principal debtor (al-makful anh) to secure that the guaranteed (al-makful bih) i.e the debtor, will be present at a definite place, e.g to pay his debt, or fine, or, in the case of retaliation, to undergo punishment.  In kafalah a person joins another person in undertaking certain obligation. Consequently, both persons become jointly liable to meet any claim that may arise from this obligation 6
  7. 7. GUARANTEE BASED ON AL- KAFALAH  Pillars Of al-Kafalah  Guarantor/surety (al-kafil) - A person who gives the guarantee is also called surety. A person who agrees to be responsible for another person’s liability especially paying for his debt  Creditor (al-makful lah) - A creditor to whom the guarantee is given  Principal debtor (al-makful anh) - The person in respect of whose default the guarantee is given. He is also called the principal debtor.  Guaranteed (al-makful bih) i.e the debtor, things - The claim itself whether it relates to the person or property.  Types Of al-Kafalah  Al-Kafalah bi al-Nafs (Guarantee of Person)  The guarantor is assuming the responsibility to make sure the presence of the principal in a lawsuit.  This is also possible in cases where the principal owes the creditor.  Al-Kafalah Bi al-Mal (Guarantee of Property)  Can be both for the settlement of a debt (dain) or a guarantee that a certain specific thing (‘ain) would be returned.  For instance, the guarantor is liable to make sure that a certain property bought by the buyer will be returned to him. The creditor has the option of demanding repayment from either the principal or the guarantor. 7
  8. 8. FLOWS OF AL-KAFALAH Kafil (Gurantor) Makful Bih (Debtor/ Things) Makful Anh (Principle Debtor) Makful – Lah (Creditor) Guarantoragreestobe responsiblePrinciple Debtor’sliability Creditorcanretrievehisdebt incaseofdefaultbythe principledebtor 8
  9. 9. COMMISSION BASED ON JU’ALAH  Definition of Ju’alah:  Declaration(akad) for a commitment or a promise for a person to pay some fee to another person for the task that have been done.  Ju’alah must be clearly stated in term of the task that need to be done, the time of the task, and also the object of Ju’alah is not prohibited in Shariah.  The commission for Ju’alah must be given only after the task have been done.  Pillars of Ju’alah:  Ja’il (a person that promise to give the commission for the achievement of the task )  Maj’ullah (a person that perform the task).  Ju’alah (fee)  Sighah (Ijab (offer) and Qabul (acceptance)) 9
  10. 10. FEE BASED ON AL-UJR  Ujr can be defined as compensation or  It refers to a contract of proposed and known usufruct with a specified and lawful return or compensation for the effort or work which has been expended.  Refers to commissions or fees charged for service.  Pillars of al-Ujr:  Al-Ajir (The recipient of the payment – Employee, hired worker etc.)  Musta’jir (A person who gives something for hire– Employer etc.)  Al-Amal (Service)  Ujrah (Payment of service)  Sighah (Offer (Ijab) and Acceptance (Qabul)) 10
  11. 11. FEE BASED ON AL-UJR STUDENT 1. Student apply for PTPTN 2. Finance the students 3. Payback the money + Al- Ujr 11
  12. 12. REMITTANCE BASED ON AL- HIWALAH  Definition of al-Hiwalah:  To transfer a debt from one person (debtor) to another with the same price, it comes to the consequence than the liability of the debtor is abolished. In other words, the first obligator is freed from any financial obligations.  Hiwalah is a contract which caused the transfer of debt from one party to another.  According to Mughni Muhtaj, the term Hiwalah is refer to the debt transfer from a party/person to another. 12
  13. 13. PILLARS OF AL-HIWALAH  Pillars of al-Hiwalah  Muhil - A person who is transfers his debt to another person.  Muhal-Lah - A creditor, whom his property/ debt is transferred to be paid by another person instead of his debtor.  Muhal Alaihi - Tranferee– a person who accept a hiwalah to himself  Muhal Bih - The things which is transferred by Hiwalah  Sighah - Ijab (Offer) and Qabul (Acceptance)  Categories of al-Hiwalah  Hiwalah Muqayyadah (Restricted hiwalah )  The transferee to pay from property of the transferor, owed to him by the transferee, or in the hand of the transferee  This type of hiwalah when a transfer is made with reference to the debt on the transferee. The majority only recognizes this type of hiwalah.  Hiwalah Mutlaqah (Absolute hiwalah)  A hiwalah which is not restricted for payment to be made from property of the transferor in the hands of the transferee  This is a type of hawalah where the contract is concluded without reference to the debt on the transferee and he accepts the transfer. The majority argues that the contract is a kafalah and not hiwalah. 13
  14. 14. FLOWS OF AL-HIWALAH Muhal Alaihi (Transferee) Muhil (Transferor/ Debtor) Muhal Lah (Creditor) Muhal Bih (Debt/ Things which is transfered) Debtorwillmakeoffer(ijab)totransfer hisdebttothetransfereeand transfereewillaccept(qabul)the hiwalahprocess Transfereewillhaveto paythedebttothe creditor 14
  15. 15. END OF CHAPTER15

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