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IMU502 - APPLICATION OF FIQH MUAMALATARTICLE REVIEW:THE APPLICATION OF WADI’AH CONTRACT BY SOME FINANCIAL INSTITUTIONIN MALAYSIAIC2103ALECTURER:NURUL HASANAH BINTI TAMILIGROUP MEMBER:MUHAMMAD IQBAL BIN PAUZI (2019257166)ABDULLAH FAHMY BIN ROSLI (2019294054)FAQRUL AMMAR BIN ABD RAHMAN (2019219226)NIK...

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IMU502 - APPLICATION OF FIQH MUAMALAT

ARTICLE REVIEW: THE APPLICATION OF WADI’AH CONTRACT BY SOME FINANCIAL INSTITUTION IN MALAYSIA

IC2103A

LECTURER: NURUL HASANAH BINTI TAMILI

GROUP MEMBER: MUHAMMAD IQBAL BIN PAUZI (2019257166) ABDULLAH FAHMY BIN ROSLI (2019294054) FAQRUL AMMAR BIN ABD RAHMAN (2019219226) NIK AMIRUL AQIEL NIK KAMAL (2019218476) MUHAMMAD ANAS BIN ISKANDAR (2019230594)

AKADEMI PENGAJIAN ISLAM KONTEMPORARI (ACIS) UNIVERSITI TEKNOLOGI MARA SHAH ALAM

Title: The Application of Wadi‘ah Contract By Some Financial Institutions in Malaysia.

Introduction

The article that has been discussed is about the application of wadi’ah contract by some financial institution in Malaysia written by Dr. Ahmad Basri bin Ibrahim and Dr. Azman bin Mohd Noor as lecturer from Department of Fiqh and Usul al-Fiqh, Kulliyyah of Islamic Revealed Knowledge at International Islamic University Malaysia (IIUM). This article is taken from International Journal of Business and Social Science, Volume 2, No.3 and published in January 2011. This article starts in page 255 until 264. Generally, this article is about the practice and application of Wadi’ah among financial institutions in Malaysia. The authors used data collection and research as his method in this article. This article also explained about the concept, conditions, prohibited elements, types, the evidence of legitimacy and even how its application Wadi’ah in some financial institutions in Malaysia. The authors discovered that contemporary wadi'ah had a distinct shape from the original wadi'ah. Initial, though wadi'ah is based on Amanah (turst), and contemporary wadi'ah is based on more or more daman (liability) less credit.

Summary

This article started with definition of Wadi’ah to reach article’s objective which is concept of Wadi’ah. This article tried to convey all the issues and result to reader clearly. Hence, Dr. Ahmad Basri & Dr. Azman (2011) intro with definition to ensure all readers know what is Wadi’ah. The term Wadi’ah is derived from the verb “wada’a” which means to leave, lodge or deposit. This article also clarify the definition from several scholars about Wadi’ah. First, Hanafis said Wadi’ah is empowerment to someone for keeping the owners wealth explicitly or implicitly. Second, Malikis and Shafi’is said Wadi’ah is representation in keeping possession or respectable private good in specific way. To be clear, the writer said Wadi’ah in the legal sense signifies a thing entrusted to

the care of another. This introduction is a good method to explain about the main issue to readers. Mohd Solehuddin, Azizi A.Bakara, Amirul, Hydzulkifli Hashima, Aiman bin Fadzila (2016) in theirs article uses the same method which is defined the Wadi’ah in introduction. In addition, this article also explained about elements who involve in Wadia’ah. First, the depositor (mudi’) is the proprietor of the thing. Second, Wadi’ (trustee) is the person entrusted with the thing. Third is Wadi’ah which is property deposited. Based on this paper, the theme for this paper is explanation about one product who is rebranding of the conventional savings account with the wadi’ah accounts. Next, this paper aims at explaining the concept of Wadi’ah, the evidences of its legitimacy, conditions, prohibited elements in this transaction, its types, and how its application in some financial institutions in Malaysia. When we read the whole article, the qualitative method is suitable in using for this article which is involve collecting main ideas that can be referred to the book and article. Therefore, this paper found that, modern wadi’ah took a different shape from the original wadi’ah. While original wadi’ah is based on Amanah (trust), contemporary wadi’ah is based on daman (liability) which is more or less loan. At the ending, this article conclude wadi’ah that’s bank use is a contract between customer and bank to safeguard the asset on behalf of the customer. At the same time, bank can use the asset for investment. But, this paper suggest to use qard or loan instrument for current account and mudharabah instrument for saving account. This instrument are more appropriate to be applied. This suggestion are according to the majority scholars and the official position of Fiqh Academy OIC.

ARTICLE REVIEW: - CRITICAL RIVIEW

In this article the researcher main attention is to explain the concept of wadi’ah and all the related component in it. They elaborate about the evidences of its legitimacy, conditions, prohibited elements in this transaction, its types and how its application in some financial institutions in Malaysia. The researcher also clarify the modern Wadi’ah and the classical one. This statement can be found at the abstract of the article whereby the researcher briefing generally about the reason why they do the research. From our point of view, the issue stated are intensely absorbing based on our level of study. Why we agree with that is because the article help us to understand what is Wadi’ah and why it is different with the savings account in conventional bank. The most interesting part is the prohibited elements in Wadi‘ah. In this section, we understood the prohibited element and why it is outlaw. Based on our level of study, the issue highlighted are relevant to our study area. The reason is the study address about all the general element that need to know about Wadi’ah. It also include the reason why it happen and the discussion from the jurist stated are also helpful. This encourages us to know even more deeper about the Wadi’ah savings account. In fact, the study attention are not to discuss in a specific issue. It was just a general view about the wadi’ah contract and detail elaboration on how some conditions become prohibited or legal. Next, after look into the content of the study, we could not agree more regarding the findings of the study. The researcher elaborate wisely to convey the main attention of the study. However, regardless of the generally brief about The Wadi’ah concept the researcher does not include such point for example Contemporary gold trading. It would be more interesting if the study elaborate about the various conditions of Wadi’ah with a contemporary issue as an example. A research made by (Shuib et al., 2016) that the study is about Contemporary gold trading are one of an example that can be suggest to the reviewed article.

This article can indirectly change and affect our way of thinking about wadiah because in this article have contemporary views and practice of wadi‘ah. In contrast to interest-based banking, Islamic banking is not based on the notion of a predetermined fixed return on capital. The Islamic prohibition against interest does not imply in any way that capital is free of charge or that it should

be made available without any cost or that there should be absolutely no return on capital. In fact, Islam allows a return on capital, provided that capital participates in the productive process and is exposed to business risk. Muslim economists have generally held that commercial banking in an Islamic state should be organized on the basis of some form of profit sharing, represented by mudarabah and musharakah. However, Islamic banking as it has developed and is developing is not solely based on mudarabah and musharakah. It also uses a number of other contracts permissible by Islam in order to conduct its banking business. The author tells about the history of the prophet so long that the main objective to be conveyed is less clear. the writer just needs to write just to tell about the popular events alone is enough to be used as evidence for the objective to be conveyed which is about the prophet muhammad at mount ‘Arafah. Another example of a hadith that is relatively short but achieves the objective to be conveyed, narrated by Abu Daud, Tirmidzi dan Hakim:

‫د اﻷﻣﺎﻧﺔ ااﱃ ﻣﻦ اﺋﺘﻤﻨﻚ وﻻ ﲣﻦ ﻣﻦ ﺧﻨﻚ‬ Which means "Let the message of those who trust you and do not betray those who betray you." (Mariyam Tariq, 2018). The above hadith explains that the person who is entrusted must be able to maintain the trust well and not betray the person who has been entrusted. From the verses and hadiths above, the scholars agree to say, akad wadi'ah (deposit) the law is mandub (circumcised), in terms of helping fellow human beings. Therefore Ibn Qudamah (thinker of the Hanafi school) stated that from the time of the Prophet to the next generation, wadi'ah has become ijma '' amali , which has become a habitual behavior by entrusting goods to others. In other words, Wadiah corresponds to safekeeping, custody, deposit and trust. In Islamic finance, wadiah refers to the deposit of funds or assets by a person with an Islamic bank. In this arrangement, the depositor deposits his funds or assets with the bank for safekeeping and in most of the agreements the bank charges a fee for the safe custody of the depositor’s funds. This article also have an adequate conclusion. This is because the conclusions presented by the author achieve the objectives to be conveyed to the reader covering the entire topics presented, for example introduction, evidences of its legality, the conditions to wadi‘ah, types of contemporary wadi‘ah and mechanism of contemporary wadi‘ah. All that is presented restates what is presented in the article in different words and is easily understood by the reader. The author has stated if saving is based on Mudharabah principle, providing that all the conditions of Mudharabah are met and applied, then the depositors can have a peace of mind to expect return

from his investment and at the same time it must be borne in mind that they will also bear loss as the profit can only be expected but not guaranteed. Statements like this can convince users to understand what a wadiah is by conveying through the difference between wadiah and mudharabah so as not to confuse the reader. In this article, in our opinion, the researcher finds the relevant reference materials with the title of the study through the library method. Based on the title of the study, this research requires to reference materials from various fields such as islamic financial instruments, al-quran, hadists and researchers also study contemporary wadiah. With regard to contemporary wadiah, the researcher touched about the type of contemporary wadiah and the mechanism of contemporary wadiah. So, everyone the things mentioned above need to be searched by the researcher to get information about this study. In addition, past studies have also been reviewed by researchers to support the title of the study and make it a source of reference. Past studies are important to show that this study does not repeat previous studies. It also aims to appreciate the scientific writing of scholars in the same field with this study. Most of the previous studies were taken from that study conducted locally and some studies were also taken from outside especially books from arab countries. This article also uses qualitative research to complete or achieve the objectives to be conveyed to the reader. Researchers use qualitative research to get an in-depth understanding of something that wants to be studied, namely wadiah in general and in particular, the application of wadiah contract by some financial institution in malaysia. this study is done by the researcher also to get detailed information related to something that is studied. This means to get detailed and in-depth qualitative research conducted. In addition, this method can explain the event holistically in the actual situation of the event occurred without any manipulation by the researcher, for example when the researcher explains about the history, hadith related to wadiah and verses of the Qur'an

CONCLUSION

This research review’s purpose is to help the reader understand about the application of wadi‘ah contract by some financial institutions in Malaysia. Dr Ahmad Basri bin Ibrahim and Dr Azman bin Mohd Noor who are the authors of the article also explained about the proof of validity, conditions of wadi'ah, prohibited elements in wadi'ah , type of Wadi'ah ah, contemporary wadi'ah mechanism, and lastly, on the mechanism of Wadi'ah in Bank Islam Malaysia Berhad(Ibrahim et al., 2011) to explain in more detail the concept of wadiah so that readers can understand more deeply about the concept of wadiah. It is also clear that we, as a reader also were inseparable in learning and got to uncover some new discoveries from the articles specifically in the main point of evidence of its legality which is the authors wrote it in their article. There are not specifically mentioned in the Qur’an about the concept of wadi’ah, yet the authors can show the evidence from al-quran and even from al-hadith. By researching and studying this article, it will be able to facilitate us in the future when doing research or when dealing in daily life, especially in muamalat affairs in order for us to make the right choice in making any decision. We must keep in mind that everything begins with purpose in Islam. We will be praised for positive intent, but we will later face the repercussions in Akhirat if we have negative thoughts and really do so. Islamic banking is so popular that the Islamic window meets the growing demand of mainstream banks. Therefore, Al-Wadi'ah is one of the safest human security, especially for Muslims who fear Allah and lose their faith of all kinds (riba).(Mahbub et al., 2016) If Islamic banks pay more attention to the importance and practice of Islamic Shariah as a whole, the purpose of this Wadi'ah is fulfilled.

Reference 1. Ibrahim, A. B., & Noor, A. M. (2011). The application of Wadi?ah contract by some financial institutions in Malaysia. International Journal of Business and Social Science, 2(3), 255– 264. Retrieved from http://irep.iium.edu.my/5701/

2. Mahbub, M., & Shammo, A. M. (2016). Does “Wadi’ah” Follow Islamic Principles in Islamic Banks? IOSR Journal of Business and ManagementVer. IV, 18(6), 2319–7668. doi: 10.9790/487X-1806043945

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