Late Payment Treatment in Islamic Banking Institutions in Malaysia: A Maqasid Analysis

Abdullah, Atikullah

doi:10.6007/ijarbss/v8-i11/4882

Cited by 4 publications

(6 citation statements)

References 3 publications

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“…This meaning can be seen clearly in the reason for the revelation of Quranic verse 117 in Surah at-Taubah. According to fiqh, mu'sir means genuine inability to fulfil financial or nonfinancial obligations (Al-Mawsu'at al-Fiqhiyyah, 1986) (Abdullah, 2018). This terminology has been widely practiced during the pandemic when the Central Bank of Malaysia announced the implementation of an automated six-month moratorium for financing and loans (Shaharuddin, 2020) and leave each bank to define the mu'sir based on the nature of business.…”

Section: Gharimin's Interpretationmentioning

confidence: 99%

The role of zakat distribution on the sustainability of gharimin (genuine debtors) in Islamic financial institutions in Malaysia

Yamaludin

Alwi

Rosman

et al. 2023

JIABR

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Purpose This study aims to explore the COVID-19 impact on the sustainability of gharimin (genuine debtors) in Islamic financial institutions (IFI) in Malaysia. The analysis was further conducted to expand the interpretation of gharimin in zakat institutions (ZI) to use the role of zakat distribution during the post-pandemic period due to income shock and long-term unemployment. Design/methodology/approach This study adopted a qualitative research approach with grounded theory analysis to integrate theoretical insights into the interpretation of gharimin and current practices from the perspectives of ZI and IFI. An in-depth interview with 18 informants was conducted, and data were collected from senior management positions in the zakat distribution department, academicians who are experts in the area of zakat, and heads of Shariah departments in IFI. Findings Expanding the interpretation of gharimin could help ZI and IFI recover the sustainability of gharimin for preparedness during post-pandemic and any emergency crisis in the future. Practical implications This study implies the potential role of ZI in combating the risk of defaulting debtors in IFI to prepare for pandemic recovery in the future. Social implications The new interpretation assists gharimin in reducing the burden debt using the zakat fund and protects genuine debtors by preventing IFI from declaring default or bankruptcy. Originality/value This study narrows the literature gaps about gharimin in IFI in the context of the pandemic. To the best of the authors’ knowledge, this is, perhaps, the first paper to present the expansion of interpretation for gharimin into mu’sir in IFI in Malaysia.

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Section: Gharimin's Interpretationmentioning

confidence: 99%

The role of zakat distribution on the sustainability of gharimin (genuine debtors) in Islamic financial institutions in Malaysia

Yamaludin

Alwi

Rosman

et al. 2023

JIABR

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“…As the Islamic finance industry works on different underlying principles from its conventional counterpart, the above-mentioned practice by conventional financial institutions cannot be adopted by IFIs as one of their credit risk mitigation techniques. Shar ı'ah considers charging a sum of money in addition to the amount of the debt to be rib a (interest), and thus IFIs cannot use such a solution to prevent or mitigate risks arising in cases of late payment by their customers (Hatta and Samah, 2015;Abdullah, 2018). AAOIFI Shar ı'ah Standard No.…”

Section: Constituents Of the Charity Accountmentioning

confidence: 99%

“…Further, it has been argued that not charging anything for the failure of customers to pay on time would amount to moral hazard. Therefore, the Shar ı'ah legitimacy on donation commitment in the context of IFIs should be analysed not only from the perspective of Islamic law of contract but also from the wider perspective of Shar ı'ah objectives (Abdullah, 2018).…”

Section: Purification (Tatmentioning

confidence: 99%

“…(12) Incapable debtor or negligent defaulter: It is permissible for an IFI to receive a donation commitment regardless of the financial position of the customer, whether he is genuinely incapable (Abdullah, 2018) or he is a negligent defaulter. This is owing to the self-imposition nature of the doctrine of donation commitment where the customer has committed to donate in the event of late payment (AAOIFI Shar ı'ah Standard No.…”

Section: Scope Of the Standardmentioning

confidence: 99%

“…Alternatively, the takāful company may distribute the proceeds amongst certificate holders. Waiving of CDA : A donor (defaulting customer) is not allowed to reclaim what he has given as a donation as such donation contract involves transfer of ownership. The IFI is also not allwed to waive such CDA once the customer fails to make the due payments unless it is stated in the contract that such CDA is due upon the IFI request and notification. Incapable debtor or negligent defaulter : It is permissible for an IFI to receive a donation commitment regardless of the financial position of the customer, whether he is genuinely incapable (Abdullah, 2018) or he is a negligent defaulter. This is owing to the self-imposition nature of the doctrine of donation commitment where the customer has committed to donate in the event of late payment (AAOIFI Sharī‘ah Standard No.…”

Section: Proposed Sharī‘ah Standard and Guidelines For Charity Accountsmentioning

confidence: 99%

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Charity account in Islamic financial institutions: creating a defined Sharīʻah standard

Al-Ali

2022

IJIF

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PurposeThis article seeks to propose a defined set of Sharīʿah standards and guidelines for the charity account in order to provide clear guidance to Islamic financial institutions (IFIs) and eventually create a standardised practice in the management of the charity account by IFIs worldwide.Design/methodology/approachThis article is based on a literature review regarding the origin and concept of the charity account for IFIs. It makes reference to various primary Sharīʿah sources and contemporary Sharīʿah standards pertaining to impermissible income as it relates to the charity account. It also analyses secondary sources of reference, in particular research papers and case studies on the same subject matter.FindingsThis article proposes relevant Sharīʿah standards required for the better functioning and standardisation of the charity account application by IFIs.Research limitations/implicationsThis article will help IFIs, standard-setting bodies and regulators to develop a defined charity account framework. It also addresses the gaps discussed in past research and case studies that have not been resolved to date, particularly on the determination and management of charity accounts at the level of IFIs.Practical implicationsThe charity account will be better controlled and thus eliminating potential reputational issues arising from collecting and disbursing commitment to donate amounts (CDA).Social implicationsThe charity account distribution will be better managed and thus of more benefit to the society and recipients.Originality/valueThis article promotes the idea of standardisation in the practices of charity accounts, especially in terms of sources and disbursement.

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Application of Ta’widh and Gharamah in Islamic Banking in Malaysia

Muneeza

Zainudin

Ali

et al. 2019

JMIFR

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The objective of this paper is to explore the practical application of ta’widh and gharamah in Islamic banking in Malaysia with reference to the guidelines that are applicable to date; and find out the issues detected in the implementation of them. In the course of doing this, Shariah reasons for imposing ta’widh and gharamah in Islamic banking are discussed. Also, whether ta’widh and gharamah would be required for Islamic banking with reference to possible alternatives to them is also discussed. This qualitative study primarily focuses on library research and adopts case study approach for analyzing the application of ta’widh and gharamah. The jurisdiction of the study is Malaysia because the central bank of the country has made policies on the matter. The paper draws on observations made by Shariah scholars about the policies on the subject matter. This study gives an insight into the history and issues related to ta’widh and gharamah which are often kept tacit. It is recommended that future studies should look into the effectiveness of these two approaches to serve as a deterrent factor and contribute to the declining rate of non-performing financing in Islamic banks.

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Late Payment Treatment in Islamic Banking Institutions in Malaysia: A Maqasid Analysis

Cited by 4 publications

References 3 publications

The role of zakat distribution on the sustainability of gharimin (genuine debtors) in Islamic financial institutions in Malaysia

The role of zakat distribution on the sustainability of gharimin (genuine debtors) in Islamic financial institutions in Malaysia

Charity account in Islamic financial institutions: creating a defined Sharīʻah standard

Application of Ta’widh and Gharamah in Islamic Banking in Malaysia

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