Improvising Kafalah Bank Guarantee-i / Dr Sharifah Faigah Syed Alwi
Kafalah (guarantee) is a tabarru' (voluntarily gift) contract where the majority of past Muslim jurists had the opinion that imposing ujrah (fee) on kafalah is not allowed. Islamic banks in Malaysia offer Kafalah Bank Guarantee-i (BG-i) as one of their trade finance facilities and they do charg...
Saved in:
| Main Author: | |
|---|---|
| Format: | Book Section |
| Language: | English |
| Published: |
Division of Research, Industrial Linkages and Alumni, UiTM Cawangan Melaka
2013
|
| Subjects: | |
| Online Access: | https://ir.uitm.edu.my/id/eprint/79127/1/79127.pdf https://ir.uitm.edu.my/id/eprint/79127/ |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Kafalah (guarantee) is a tabarru' (voluntarily gift) contract where the majority of past Muslim jurists had the opinion that imposing ujrah (fee) on kafalah is not allowed. Islamic banks in Malaysia offer Kafalah Bank Guarantee-i (BG-i) as one of their trade finance facilities and they do charge fees for it. There are three methods in charging fees for Kafalah BG-i practiced by Islamic banks in Malaysia such as using the percentage ruled by the Association of Bankers Malaysia, calculating the actual cost incurred by the banks in issuing the BG-i and using the bank’s own calculation in determining the fees. These different methods occur because the Shariah Committees of Islamic banks have different interpretations towards the nature of kafalah being a tabarru' contract. The objective of this paper is to resolve Shariah issues with regards to current Islamic banks' practices on charging fees on Kafalah BG-i by embedding the concept of wakalah (agency) in BG-i. The Islamic banks are allowed to charge fees based on their rendered services under wakalah contract. This new improvised BG-i where both kafalah and wakalah contracts are combined in BG-i will be proposed to Bank Negara Malaysia and Islamic banking industry with the hope that it will be accepted globally. |
|---|