Classification of defaulters in the payment of debt in Islamic banking practices

Hasan, Aznan and Haron, Muhamad Nasir and Mohamed, Mohd Faysal and Mana, Budeeman (2017) Classification of defaulters in the payment of debt in Islamic banking practices. Al-Shajarah, 2017 (Special Issue: Islamic Banking and Finance). pp. 85-103. ISSN 1394-6870

	PDF (scopus) - Supplemental Material Restricted to Registered users only Download (414kB) | Request a copy
	PDF - Published Version Restricted to Registered users only Download (2MB) | Request a copy

Abstract

This paper discusses the issue of treatment of debt defaulters from SharÊ'ah perspective and its current practices in Islamic banking and finance. In doing so, the paper first explains the concept of debt and its payment obligation from Islamic point of view. The paper also critically reviews the current practice of treating defaulters by Islamic banks. A thorough analysis on various opinions and views of the classical and contemporary jurists in determining the types of defaulters is also provided. The paper concludes that besides the categorization of defaulters to solvent and insolvent in the modern Islamic banking practice, a new category namely, muta'atthir (a solvent debtor who is facing temporary shortage of liquidity) should also be considered. These debtors are not insolvent based on the ratio of their total assets to debts. However, they are in situation of default due to temporary shortage of liquidity that they are facing. Hence, this new category might have its own ruling from Shari'ah point of view in terms of debt settlement and restructuring where it does not carry the ruling of insolvent debtor.

Item Type:	Article (Journal)
Additional Information:	2241/63102
Uncontrolled Keywords:	Defaulter; I'sar; Iflas; Insolvent debtor; Islamic banking; Solvent; Ta'atthur.
Subjects:	H Social Sciences > HG Finance H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance H Social Sciences > HJ Public Finance > HJ8003 Public credit. Debts. Loans. Claims
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF)
Depositing User:	Dr Aznan Hasan
Date Deposited:	16 Apr 2018 15:49
Last Modified:	18 Apr 2018 15:02
URI:	http://irep.iium.edu.my/id/eprint/63102

Actions (login required)

View Item