Compensation and Penalty Imposed on Debt Settlement of Islamic Products
As the conventional system has been established ever since, the concept of penalty plays an important role in the conventional system at least to secure the financiers from being manipulated by the financees. However, the classical Muslim jurists prohibited such a type of penalty to be imposed...
| Main Authors: | , |
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| Format: | Article |
| Language: | Arabic |
| Published: |
Universiti Sultan Azlan Shah
2015-06-01
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| Series: | Global Journal Al-Thaqafah |
| Subjects: | |
| Online Access: | http://www.gjat.my/gjat062015/7420150501.pdf |
| Summary: | As the conventional system has been established
ever since, the concept of penalty plays an
important role in the conventional system
at least to secure the financiers from being
manipulated by the financees. However, the
classical Muslim jurists prohibited such a type
of penalty to be imposed on any Islamic debtbased
transaction since it would involve an
element of usury (riba). The purpose of this
paper is to extend the examination on debt
settlement compensation and penalty, and their
compliancy with shariah law. The study was
then conducted within the ambit of two sacred
revelations and the rest of reasoning principles
in usulfiqh as well as Islamic legal maxims. The
findings show that the compensation (ta’widh)
and penalty (gharamah) might be imposed by
Islamic financial institutions on early settlement
within lock-in period and on delayed payment.
In addition, discretional rebate (ibra’) might be
given to the early settlement after the lock-in
period. The limitation of this study is that it
just focuses oncompensation and penalty, and
concentrates only on Islamic financial system. |
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| ISSN: | 2232-0474 2232-0482 |