Guaranteeing investment deposits in Islamic banking system

Abstract EN

For developing a viable Islamic banking system, protection of depositors money is a basic and crucial question.

A depositor wants both security and growth for his saving but Islamic banking provides him only one.

This would have led the majority of household to shy away from the system which no country can afford.

So there is genuine need a darurah to provide such guarantee.

It is also necessary to maintain social justice.

Until this need is recognized by shariah experts, murabahah and concept of tabarru (voluntary donation) may be used by Islamic banks to guarantee the principal amount of depositors.

In this regard al-Teganis arguments make Shariah as well as economic sense.

Such a practice will also be conducive to reducing the possibility of moral hazard on the part of the bank in the use of the depositors money.

To guarantee the deposit as an act of tabarru, banks may keep a fraction of the annual income of shareholders in a special account of shareholders which could be used to compensate the depositors for any loss of their principal amount that may occur when doing business with their money.