ment. While in Qard, the same kind of the loaned commodity with essentially the same nature or character could be paid back. the other hand, a Dayn is the result of any contract or credit transaction. The created debts ought to be returned without any profit over their principal amounts. Salaf is a form of Dayn that is similar to Salam. It is used for a loan of fixed tenure and in that sense it is closer to Dayn; Salaf includes loans for short, intermediate and long term loans and the price of the commodity is paid in advance, while it is delivered at a future date. The amount given as Salaf cannot be called back before its due date. Therefore, this creates a liability for the seller to supply the commodity in the future.addition, in all credit transactions, Islam recommends witnesses and documentation. This provides safeguards against disputes and allows credit transactions for a fixed or known time period. And since Islamic banks can neither pay interest nor charge any return on loans, they have the right to ask for collateral to ensure recovery of the loan amount. In fact, the c lient cannot refuse to repay the loan or debt in case he has incurred loss in the business conducted with the bank s loan. Also, The Shari'ah puts a great deal of emphasis on repayment of loans/debts and the borrower also has a moral obligation to repay a loan. For that reason, banks can include, with mutual consent of the clients, a penalty clause in the credit contract to mitigate the risk of default, but the penalty charged on any default has to go to charity. With regard to a possible rebate tha t could be given to the debtor for repaying the loan earlier than the due date, the Shari'ah considers that as a reduction of interest in the financing costs arising from prepayment of the amount that would be stipulated in a contract. And, there is unanim ity about the illegality of remitting a part of the debt payable by anyone and getting the remaining part. However, Muslim jurists have differentiated between loans or debts that have become due or can be called back at any time (Duyoon Haalah), and loans where time of payment settled between the creditor and the debtor and the debt is not yet due (Duyun Mu ajjalah). Duyoon Haalah are allowed by almost all Muslim jurists on the rationale that in such loans, delay is not the right of the debtor. In fact, rebate should neither be provided in the agreement nor be made a condition in the loan contract. In opposition, remission of a part of a debt not yet due involves Riba. [8]
Modes of financing
In recent times, Islamic financing services have increased phenomenally around the world. Islamic banks offer now, to their clients, different modes to ...
