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Tawarruq Time Deposit With Wakalah Principle: An opinion That Triggers New Issues

Author

Listed:
  • Ismail, Abdul Ghafar

    (The Islamic Research and Teaching Institute (IRTI))

  • Nik Abdul Ghani, Nik Abdul Rahim

    (Universiti Kebangsaan Malaysia)

  • Mat Zain, Mat Nor

    (Universiti Kebangsaan Malaysia)

Abstract

The development of Islamic banking system in offering the products which is based on the shariah principles has witnessed a tremendous success. There are many new products being introduced as alternatives to conventional ones. Yet, at the same time, some of these products remain hotly debated amongst jurists on their validity and subsequently become non-compliant products. One of such products that have been introduced is tawarruq-based deposit product. In addition, the newly introduced Islamic Financial Services Act 2013 states that deposit products which are characterized as principal guaranteed feature could not be offered based on mudarabah or wakalah as they are only appropriate for investment products (principal non-guaranteed products). Therefore, the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to take place. However, the wakalah principle is also embedded in this twarruq deposits. Hence, this paper makes an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue.

Suggested Citation

  • Ismail, Abdul Ghafar & Nik Abdul Ghani, Nik Abdul Rahim & Mat Zain, Mat Nor, 2014. "Tawarruq Time Deposit With Wakalah Principle: An opinion That Triggers New Issues," Working Papers 1435-2, The Islamic Research and Teaching Institute (IRTI).
    • Handle: RePEc:ris:irtiwp:1435_002
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    References listed on IDEAS

    as
    1. Alsayyed, Nidal, 2010. "The Uses and Misuses of Commodity Murabaha: Islamic Economic Perspective," MPRA Paper 20262, University Library of Munich, Germany.
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    More about this item

    Keywords

    Deposit; Islamic Financial Services Act; Tawarruq; Wakalah;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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