A revisit to the practice of late payment charges by Islamic Banks in Malaysia

Ezani Yaakub, and Mohamed Azam Mohamed Adil, and Asmak Husin, and Mohd Dani Muhamad, and Mohammad Mahyuddin Khalid, and Mohd Solahuddin Shahruddin, (2014) A revisit to the practice of late payment charges by Islamic Banks in Malaysia. Jurnal Pengurusan, 42 . pp. 185-190. ISSN 0127-2713


Official URL: http://ejournal.ukm.my/pengurusan/issue/view/614


Islamic banking in Malaysia have been experiencing late payment and default issues because customers are not allowed to be charged with interest (riba) as opposed to the practices in the conventional banking. To mitigate these issues, the Shariah Advisory Council of Bank Negara Malaysia has enforced ta’widh and gharamah as regulatory alternatives. Practically, ta’widh and gharamah were imposed on the defaulting customers who fail to meet their obligation to pay their financing based on several conditions. Given the significance of its imposition, this paper aims to analyse the current practice in Islamic banks and examine the views of contemporary Muslim scholars on ta’widh and gharamah and its suitability as alternatives for avoidance of riba.

Item Type:Article
Keywords:Ta’widh (compensation); gharamah (penalty charges); defaulting customers; actual loss; Muslim scholars’ view; Islamic banking
Journal:Jurnal Pengurusan
ID Code:9420
Deposited By: ms aida -
Deposited On:13 Jan 2016 03:32
Last Modified:14 Dec 2016 06:49

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