Indonesian Council of Ulama Fatwa No. 79 of 2011 on Qardh Agreements Utilising Customer Funds

This fatwa acknowledges that shari'a banking customers and shari'a financial institutions require products that utilise qardh agreements as transactional facilities, such as mortgages (rahn), hajj arrangement financing, shari'a charge cards, debt transfer products, and shari'a credit cards. The fatwa defines qardh as a fund-channelling agreement executed by a shari'a financial institution in a customer's favour, repayable to the shari'a financial institution at a time agreed upon by both parties. The fatwa acknowledges that there exist two types of qardh agreements:

  1. stand-alone qardh designed for social purposes, and not as a facility for another transaction designed to garner profit;
  2. qardh executed as a facility for another transaction designed to garner profit.

The fatwa states that type 1 qardh agreements may not utilise customer funds, whereas type 2 may utilise customer funds.

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