FIQH FOR Economist II ECON3511
Sem,1 2014– 2015 CONTRACT OF WADIAH
As students of fiqh for Economist, we have gathered enough information through lectures, analysis in internet, books and hadith come into a conclusion that contract of wadiah is very important contract for Muslim. This is because of the fact that the market for Islamic banking on growing day to day. In this assignment that we have clearly explained Islamic terms and, practices and issues about contract of wadiah. Before writing this assignment, we collected information from various sources such as various books, internet, and visiting websites. Most of practices and issues are adopted from Islamic banking system.
For the purpose of making it more convenient to the reader we have divided this project into five parts.
The first part contains introduction of wadiah which related to definition and what Muslim scholars says about wadiah. The second part contains the practices of wadiah in modern Islamic banking and what type of products is included under the contract of wadiah. The Third part contains about pillers and condition about Wadiah. The fourth part contains about the issuses or challenges faces under the contract of wadiah. The final part contains about the practice and issue which discussed in the project
The word Wadiah is come from Wada’a which means that keep, store, entrust, leave or deposit. Normally it means that something place under somebody who is not the owner to keep. However, Muslim scholars have defined the term wadi‘ah as follows: 1. According to the Hanafi School, Empowerment to someone for keeping the owners wealth explicitly or implicitly. 2. Wadiah is defined as “setting up an agency contract for the purpose of protecting one’s wealth” by Maliki school of law. Wadiah is one of the important services In Islamic banking. A bank is act like a keeper and become responsible, liable for its safekeeping with a guarantee refund of the entire amount of the deposit, or any part of the outstanding amount, when the depositor demands repayment. People believe, Islamic banking system is free from Riba in every aspect. This implies that there is no interest charge imposed by the banks on their deposit products. Unlike Islamic banks, conventional banks provide interest income to their depositors. Wadi‘ah Yad al-Amanah (Act of Trust) and Wadi‘ah Yad al-Damanah (Safekeeping with Guarantee) are the main component of wadiah. These contracts have few pillars and conditions. In modern Islamic banking system it has been defined as the consent of the depositor to deposit a certain amount of money with the bank with different terms according to the type of deposit. When the depositor demand or wants to withdraw his money from the bank and the bank is responsible to return that certain amount of money. One of the key issues about contract of wadiah is many countries use contract of qard in term of Wadiah Yad Dhammanh. Because of Wadiah Yad Dhammanh is considered similar in nature to Qard. Therefore the rules of Qardh should also apply to Wadiah.
Practices of wadiah:
In practice, Islamic banks provide guarantee to return the full amount of deposits placed by customers in accounts even though the facilities operate on wadiah. Currently in Islamic banking system, there are two types of contract practice under Wadiah. They are -
1. Wadi’ah yad amanah (saving account)
2. Wadi’ah yad dhamanah (current account).
Wadi’ah yad Amanah( safe custody):
This simply means that keeping with...
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