Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan

In Islamic banking system various Shari'ah principles are used as underlying contracts to receive the deposits. Usually wadi'ah and qard hasan are used for the current and saving deposits, while mudarabah is used for investment deposits. However, the issue of insuring investment deposits c...

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Main Authors:	Osmani, Noor Mohammad, Rahman, Md. Habibur
Format:	Article
Language:	English
Published:	Asian Research Consortium 2016
Subjects:	HB126.4 Islamic Economics HG1501 Banking HG8719 Islamic Insurance Takaful
Online Access:	http://irep.iium.edu.my/68724/ http://irep.iium.edu.my/68724/ http://irep.iium.edu.my/68724/1/Islamic%20Deposit%20Insurance%20from%20Shari%27ah%20Perspective%20%28full%20%20%20paper%29.pdf

id	iium-68724
recordtype	eprints
spelling	iium-687242019-04-09T07:58:16Z http://irep.iium.edu.my/68724/ Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan Osmani, Noor Mohammad Rahman, Md. Habibur HB126.4 Islamic Economics HG1501 Banking HG8719 Islamic Insurance Takaful In Islamic banking system various Shari'ah principles are used as underlying contracts to receive the deposits. Usually wadi'ah and qard hasan are used for the current and saving deposits, while mudarabah is used for investment deposits. However, the issue of insuring investment deposits contradicts with the principle of mudarabah, as in principle mudarib is not allowed to provide any guarantee for the principal and fixed return, though there is a different view contrary to this. Hence this paper intends to study and analyze this issue from Shari'ah perspective. This is a qualitative paper and methods followed are descriptive and analytical. The paper also critically examines the practices of Malaysia and Sudan because unlike others these two countries established Islamic deposit insurance scheme under a particular legal system managed by a deposit insurer owned by the government. The paper posits that for a viable Islamic banking system deposit insurance is crucial from both macro and micro perspective. Deposit insurance system is considered one of the significant components of financial safety net. It maintains the public confidence in the banking system and promotes financial stability which conforms to the Maqasid al-Shari'ah. The paper concludes that insuring Islamic deposits is admissible by third party established by the state or by central banks. In fact, there is no contravention of Shari'ah if Islamic banks collaborated in establishing an institution based on the principles of cooperation and takaful to protect the deposits, where each participating bank is both a guarantor and a guaranteed. Asian Research Consortium 2016-04 Article PeerReviewed application/pdf en http://irep.iium.edu.my/68724/1/Islamic%20Deposit%20Insurance%20from%20Shari%27ah%20Perspective%20%28full%20%20%20paper%29.pdf Osmani, Noor Mohammad and Rahman, Md. Habibur (2016) Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan. Asian Journal of Research in Banking and Finance, 6 (4). pp. 11-27. ISSN 2249-7323 https://www.aijsh.com/shop/articlepdf/2016/04/14596743372.pdf
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HB126.4 Islamic Economics HG1501 Banking HG8719 Islamic Insurance Takaful
spellingShingle	HB126.4 Islamic Economics HG1501 Banking HG8719 Islamic Insurance Takaful Osmani, Noor Mohammad Rahman, Md. Habibur Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan
description	In Islamic banking system various Shari'ah principles are used as underlying contracts to receive the deposits. Usually wadi'ah and qard hasan are used for the current and saving deposits, while mudarabah is used for investment deposits. However, the issue of insuring investment deposits contradicts with the principle of mudarabah, as in principle mudarib is not allowed to provide any guarantee for the principal and fixed return, though there is a different view contrary to this. Hence this paper intends to study and analyze this issue from Shari'ah perspective. This is a qualitative paper and methods followed are descriptive and analytical. The paper also critically examines the practices of Malaysia and Sudan because unlike others these two countries established Islamic deposit insurance scheme under a particular legal system managed by a deposit insurer owned by the government. The paper posits that for a viable Islamic banking system deposit insurance is crucial from both macro and micro perspective. Deposit insurance system is considered one of the significant components of financial safety net. It maintains the public confidence in the banking system and promotes financial stability which conforms to the Maqasid al-Shari'ah. The paper concludes that insuring Islamic deposits is admissible by third party established by the state or by central banks. In fact, there is no contravention of Shari'ah if Islamic banks collaborated in establishing an institution based on the principles of cooperation and takaful to protect the deposits, where each participating bank is both a guarantor and a guaranteed.
format	Article
author	Osmani, Noor Mohammad Rahman, Md. Habibur
author_facet	Osmani, Noor Mohammad Rahman, Md. Habibur
author_sort	Osmani, Noor Mohammad
title	Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan
title_short	Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan
title_full	Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan
title_fullStr	Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan
title_full_unstemmed	Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan
title_sort	islamic deposit insurance from shari'ah perspective: special reference to malaysia and sudan
publisher	Asian Research Consortium
publishDate	2016
url	http://irep.iium.edu.my/68724/ http://irep.iium.edu.my/68724/ http://irep.iium.edu.my/68724/1/Islamic%20Deposit%20Insurance%20from%20Shari%27ah%20Perspective%20%28full%20%20%20paper%29.pdf
first_indexed	2023-09-18T21:37:30Z
last_indexed	2023-09-18T21:37:30Z
_version_	1777412919212900352

Islamic deposit insurance from Shari'ah perspective: special reference to Malaysia and Sudan

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