ISLAMIC BANKING AND FINANCE

Mahyuddin Khalid

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OTHER SERVICES

2

CONTENTS

AGENCY ( AL-WAKALAH) GUARANTEE (AL-KAFALAH) COMMISSION (JU’ALAH) FEE (AL-UJR) REMITTANCE (AL-HIWALAH)

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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.

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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

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AGENCY BASED ON AL-WAKALAH

Muwakkil.(Authorizer,

mandatory, client, principal)

Muwakkal Bih

(Things or

subject matter)

Wakil

(authorized agent, representative,

proxy)

Qabul (Acceptance)

Ijab (Offer)

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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

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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.

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FLOWS OF AL-KAFALAH

Kafil (Gurantor)

Makful Bih (Debtor/ Things)

Makful Anh (Principle Debtor)

Makful – Lah (Creditor)

Guara

nto

r agre

es

to b

e

resp

onsi

ble

Pri

nci

ple

D

ebto

r’s

liabili

ty

Cre

dito

r can re

trieve h

is debt in

case

of d

efa

ult b

y

the p

rincip

le d

eb

tor

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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))

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FEE BASED ON AL-UJR

Ujr can be defined as compensation or عوض 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))

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FEE BASED ON AL-UJR

STUDENT

1. Student apply for PTPTN

2. Finance the students

3. Payback the money + Al-Ujr

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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.

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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.

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FLOWS OF AL-HIWALAH

Muhal Alaihi(Transferee)

Muhil(Transferor/

Debtor)

Muhal Lah(Creditor)

Muhal Bih (Debt/ Things

which is transfered)

Debto

r w

ill m

ake

off

er

(ija

b)

to

transf

er

his

debt

to t

he t

ransf

ere

e

and t

ransf

ere

e w

ill a

ccept

(qabul)

th

e h

iwala

h p

roce

ss

Transfe

ree w

ill have

to p

ay th

e d

ebt to

th

e cre

dito

r

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