National Shari'a Board - Indonesian Council of Ulama Fatwa No. 92 of 2014 on Mortgage-financing

This fatwa acknowledges that previous DSN-MUI fatwas on mortgages had not accommodated the increase in mortgage-based businesses, and that shari'a financial institutions required a fatwa on the subject.

The fatwa states that all forms of financing/disbursement of funds by a shari'a financial institution can be guaranteed by collateral (rahn), but that security guarantees must be items of value, whether stationary or mobile, including state shari'a securities and other shari'a securities. Debts must be binding, quantified, and have a clear term. They may not, however, be increased if a time extension is granted. Shari'a financial institutions may issue a fine to a customer if they breach the agreement or are tardy in executing their contractual obligations.

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