Fiqh for Economist ii.

1. CONTRACTOFWADIAH

2. MD. SAJID HASAN
AHMAD BIN MAHFUZ
NAHID HASAN
UMAR ALI
Group member’s name

3. WHAT IS WADIAH?

4. Wadi‘ah Yad al-Amanah (Act of Trust)
Wadi‘ah Yad al-Damanah (Safekeeping with Guarantee)
TYPES OF WADIAH

5. Wadi‘ah Yad al-Amanah (Act of Trust)

6. Practices of Wadiah in Islamic Banking

7. Savings Account
-Meant to serve the needs of customer surplus
-Also for customers to get a return from these deposits
-The principal amount of the deposit is guaranteed
-The customer can withdraw his amount at any given time
-The customer permits the bank to use the deposits in its investments
-Returns may be given to the customer in the form of hibah – gift,
which is at the discretion of the bank
-Such deposits are used in short-terms projects,
which are normally risk free and the returns are relatively lower

8. Savings Account
Bank Islam Malaysia Berhad describes savings deposits in the
following way:
“The Bank accepts deposits from its customers looking for safe custody of their
funds and degree of convenience in their use together with the principle of Al-
Wadi‘ah. The bank requests permission to use these funds so long as these funds
remain with the bank. The depositors can withdraw the balance at any time they so
desire and the Bank guarantees the refund of all such balances. All the profits
generated by the Bank from the use of such funds belong to the portion of the Bank.
However, in contrast with the current account, the Bank may, at its absolute
discretion, reward the customers by returning a portion of the profits generated from
the use of their funds from time to time.”

9. Savings Account
Bank Islam - Wadiah Savings Account.
Age requirement: Open to all, 12 years and above
Types of Account: Individual Account(12years old and above) Trust ,
Entrust account(for children under 12 years old opened with an individual
adult), Joint Account, External, Association, Societies
Contract: Wadiah
Benefits: Token (hibah), which is given every month based on Bank’s
discretion, Free savings passbook, Bankcard facilities, Salary crediting etc.

10. Wadi‘ah Yad al-Damanah (Safekeeping with Guarantee)

11. Current Account
The Islamic Bank mobilizes customers· to deposit into its Current Account
package under the principles of Al-Wadi·ahYad Dhamanah (guaranteed
custody).
-The bank guarantees the full return of these deposits on demand
-The depositor is not paid any share of the profit or any other return in
any form.
-Depositors authorize the bank to utilize their funds at the bank’s own
risk
-Usually account holders have a right to draw cheques on their accounts.

12. Bank Islam - Wadiah Current Account
• Minimum opening: Minimum RM500.00 initial deposit for individual
account and RM1,000.00 for non-individual account. Introducer is also
required.
• Age requirement: Open to all, aged 18 and above
• Types of Account: Individual Account, Joint Account, Partnership
Account, Government Account, Association Account, Private Company
Account and Company Account
• Contract: Wadiah
• Benefits: Token (hibah), given every month based on Bank’s discretion,
Free cheque book holder, Bankcard facility (for Individual / Joint account
& Private Company Account Only), Salary crediting etc

13. Issues on Amanah and Dhaman
The original ruling in the Shariah is that wadiah is that it is a
− trust (amanah)
− righteous act (qurbah) which is encouraged and rewarded
− no agreement of guarantee because it is a pure amanah
− issue of replacement/warranty should follow a weakness from the
keeper or custodian. This is in accordance to the saying of the Prophet
(SAWS): ((‫ضمان‬ ‫المغل‬ ‫غير‬ ‫المستودع‬ ‫على‬ ‫ليس‬))
“There is no compensation on the keeper who is not negligent.”

14. Issues on Amanah and Dhaman
Some situations amanah changes to dhaman? Below are
some of these situations:
-Where the custodian - wadi’ forfeits from keeping the
wadiah.
-When the wadi’ gives the property to a third party to
keep the property without any necessity.
-Using the property
-Traveling with the property
-Denying the wadiah contract
-Putting the property together with another property
-Refusing to follow the instructions of the owner

15. Another important thing is that the bank give promises (not in contract , only
verbally ) to customers to give them return or gift in future.
For example : the bank gives promise for those who deposit minimum
10K R.M , after 6 months , the bank will give them 6% return
.
In this condition , there are two problems
1.The bank should never give the customer promise for return .
2.The bank does not give those who deposit less than 10K R.M return

16. Another issue is that , It's a loan; depositor is the lender, the
bank is the borrower.
some financial institutions in this country such as Bank Islam,
Bank Muamalat and Maybank apply wadi‘ah contract to
current and savings accounts. The contract (‘aqd) is between
the owner of the asset (customer) and the custodian (bank)
to safeguard the asset on behalf of the customer and at the
same time the bank can use the asset for investment. Thus,
the jurists suggest that qard or loan instrument for current
account and mudharabah instrument for the saving and
fixed investment account are more appropriate to be applied.

17. This can be justified by that , The depositor who
deposits the money in a bank knows that the bank will
actually mix up the deposit with other money and will utilize
and invest the money. The depositor may give consent to the
bank to utilize his money. This takes the hukm of qard and
not wadi‘ah (safe keeping).

18. Conclusion
In the modern practice of Islamic banking all the above
mentioned issues are present.
In the original wadi‘ah, if the trustee discharges his duty as
prescribed under Islamic law is not liable for any loss or
damages to the deposited item.
On this note the modern application wadiah is more likely to
be considered as loan given to the bank and if that should be
the case, the principles involved in the qard should be strictly
applied.

19. Thank You