3. DEFINITION
Qardh: Loan/ Debt
DEFINITION
Literally:
EVIDENCES To cut something off; money given to the
borrower is called Qardh since portion that has
PILLARS been cut off from the property of the lender
Also known as al-Salaf or al-Dayn
CONDITIONS Technically:
QARDH Specific contract on transferring a specified
AL-HASSAN property to another party on condition that a
DEBT similar property will be given back in return
DISBURSEMENT
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4. AL-QARDH
The property can be any type of assets ranging from
DEFINITION
cash money, livestock or business
It is called qardh, as through this contract a certain
EVIDENCES
part of the lender's property is cut off and given to the
PILLARS
borrower.
Qardh refers to a contract through which a lender
CONDITIONS gives a certain homogenous property to a borrower on
the condition that the latter is responsible to return a
QARDH
AL-HASSAN
similar property immediately upon a demand or at a
specified time.
DEBT
DISBURSEMENT
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5. EVIDENCE
Quran
DEFINITION
EVIDENCES
Hadith
PILLARS Narrated by Anas ibn Malik: The prophet saw said:
I saw on the night of Isra’ something written on the gate of
CONDITIONS the paradise. Donation(sadaqah) is rewarded 10 folds, and
qardh is rewarded 18 folds.
QARDH
AL-HASSAN
I asked Gibrail: Why is it giving Qardh is better than
donation? He replied: Because the receiver of the donation
DEBT asked for it while he actually has something, but the
DISBURSEMENT
borrower will not ask for loan except when there is a
necessity
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6. EVIDENCE
Ijma:
DEFINITION The scholar had formed an ijma’ that Qardh is permissible in
Islam
EVIDENCES This contract is classified under the category of contracts
pertaining to the utilization of usufruct (aqad al-manfa’ah)
PILLARS There is no actual transfer or exchange of property involved.
CONDITIONS
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
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7. PILLARS OF QARDH
Muqridh
DEFINITION Creditor or Lender
Muqtaridh
EVIDENCES Debtor or Borrower
Maal
PILLARS Property
Sighah
CONDITIONS
Ijab: Offer
Qabul: Acceptance
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
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8. FLOW OF AL-QARDH
DEFINITION
Muqridh (Creditor)
EVIDENCES
PILLARS
Qabul (Acceptance)
Ijab (Offer)
CONDITIONS Maal
(Property/ Asset)
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
Muqtaridh (Debtor)
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9. CONDITIONS OF QARDH
Ijab (Offer) and Qabul (Acceptance)
DEFINITION Must be in a very clear and concise type of sighah (offer &
acceptance)
EVIDENCES Ahliah
Eligibility of the contracting parties (sane, adults & qualified)
PILLARS Quantity and Quality
Must be specified in quantity, weight & quality
CONDITIONS Items that are not mixed with other material
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
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10. QARDH AL-HASAN
Literally
DEFINITION Qardh means cutting off.
Hasan means benevolence, beautiful, and kindness.
EVIDENCES The term al-qard al-hasan literally means beneficial loan,
benevolent loan, gratuitous loan, and beautiful loan.
PILLARS A debt that is free from any type of predetermined condition or
promise to repay back more than the original amount stated in
CONDITIONS the contract, but a special token is sincerely given by the debtor
to the lender during debt settlement not because any written
QARDH agreement or any predetermined provision or term
AL-HASSAN
DEBT
DISBURSEMENT
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11. QARDH AL-HASAN
Under Qardh al-Hassan, borrowers or debtor con voluntarily
DEFINITION give some extra amount more than the loan principle provided
that:
EVIDENCES Not stated in the contract
Not have agreed upon
PILLARS Not predeterminded in any manner by both parties
CONDITIONS
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
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12. EVIDENCE
Quran:
DEFINITION
EVIDENCES
PILLARS
CONDITIONS
The Quran verses explains Qardh al-Hassan between Allah and
the believers whereby it is actually an offer from Allah for them
QARDH
AL-HASSAN
to lend their energy, time and property in Qardh al-Hassan
manner
DEBT They will receive back all the things that they had sacrificed for
DISBURSEMENT
the sake of Allah plus all extra rewards that will be given to them
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13. EVINDENCE
Hadith:
DEFINITION Abu Rafi said: The prophet (s.a.w) borrowed a young camel
and then the camels from the zakat came to him. He ordered
EVIDENCES me to repay the man his young camel.
I said, I can only find a good camel in its seventh year among
PILLARS the camels
The prophet said, “Give it to him. The best of people are
those who discharge their debts in the best manner”
CONDITIONS
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
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14. PROCEDURE OF DEBT DISBURSEMENT IN ISLAM
1. The debt transactions must be documented in a written contract
DEFINITION and binding agreement.
Jumhur Fuqaha
EVIDENCES The command to “put it down in writing” is recommended
command indicating the best suggested practice; not compulsory
Supported by Abdullah Yusuf Ali that it is not obligatory in law.
PILLARS
Contemporary scholars (Mohd Tahir Asyur & Sayid Qutb)
Original ruling for the command is mandatory practice, that all
CONDITIONS
debt must be documented and not optional.
Reason: Obviously understood especially if we studied report on
QARDH
AL-HASSAN cases of false claims, forgery, and fraud in the society which
intensifies in an almost alarming rate every year.
DEBT
DISBURSEMENT
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15. PROCEDURE OF DEBT DISBURSEMENT IN ISLAM
DEFINITION
EVIDENCES
PILLARS
CONDITIONS
Verses 283 indicate the “rukhsah” which exempts parties
QARDH
AL-HASSAN involved from this following ruling provided they can really
trust each other.
DEBT By making writing debts compulsary, people will not have
DISBURSEMENT
tendency of taking things for granted from the beginning.
The ruling will be benefiacial for creditors to legitimixe their
claims to the debtors
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16. PROCEDURE OF DEBT DISBURSEMENT IN ISLAM
The objectives (maqasid ) of this rulings;
DEFINITION Secure the right of all parties involved and legitimize their claim
from one another
EVIDENCES Avoid any future dispute or argument
Organize and standardize the procedure of muamalat in the
business society
PILLARS
Enable to distinguish between legal and illegal contracts
CONDITIONS
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
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17. PROCEDURE OF DEBT DISBURSEMENT IN ISLAM
2. The parties involved must not be reluctant or wary in
DEFINITION documenting every single loan transaction regardless of its size
or duration. The emphasis given on documentation of debt has
EVIDENCES been justified as in above verses:
Aqsat
It is preferable, equitable and fairer for all parties in sight of
PILLARS
Allah
Aqwam
CONDITIONS
A documented testimony or evidence is more reliable and
consistent than oral testimony which based solely on memory
QARDH
AL-HASSAN It can prevent any suspicion or doubt on the contract itself,
or any claim made by any parties
DEBT
DISBURSEMENT
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18. PROCEDURE OF DEBT DISBURSEMENT IN ISLAM
3. The parties involved must provide witnesses to certify the debt
DEFINITION contract with the following conditions:
The witnesses must be either 2 males or 1 male and two
EVIDENCES females
The witnesses must be reliable and approved or accepted by
PILLARS both parties. Reliability is based on the track record of the
witnesses.
The witnesses must not refuse to testify when they are called
CONDITIONS
upon by disputed parties or by the relevant authorities
QARDH
AL-HASSAN
DEBT
DISBURSEMENT
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