The ʿUrf of Hibah on deposits : an analysis in the light of new trends in Islamic financial industry in Malaysia

Abstract EN

This paper explores the role of ʿurf (custom) in Islamic finance, particularly when it becomes fāsid (invalid).

While ʿurf is among the Sharīʿah sources in muʿāmalāt (commercial activities), some of the cases may need to be reviewed.

Based on library research, the findings of this study reveal the roles of ʿurf in Islamic finance as follows: (i) interpreting rulings on Sharīʿah texts; (ii) establishing rulings in areas that have not been clarified by Sharīʿah; and (iii) reconsidering the change of financial practices.

As for the case of hibah, it is known that BNM has issued a special regulation to reconsider the practice of hibah in wadīʿah among Islamic banks to avoid the element of ʿurf fāsid on that matter.

This approach has been followed by Tabung Haji by replacing its wadīʿah with wakālah.

While this study may be considered as a conceptual paper, it still provides an analysis on the real practice of hibah on Islamic deposit in Malaysia.