Understanding Qard Al-Hassan DOCX

Title	Understanding Qard Al-Hassan
Author	Khalid Al Barbarawi
Pages	11
File Size	44.6 KB
File Type	DOCX
Total Downloads	209
Total Views	422

Summary

UNDERSTANDING IN QARD HASSAN Introduction Definition of Qardhul Hassan can be easily found in many text books. For example Ayub (2007, 492): says: “Qardh literally “to cut”. It is so called because the property is cut off – transferred to the borrower.” Literal meaning The Qardhul Hassan consists of...

Description

UNDERSTANDING IN QARD HASSAN Introduction Definition of Qardhul Hassan can be easily found in many text books. For example Ayub (2007, 492): says: "Qardh literally "to cut". It is so called because the property is cut off – transferred to the borrower." Literal meaning The Qardhul Hassan consists of two words: (1) al-Qardh, and (2) al-Hassan. Al- Qardh is associated with the word qirad means to cut. It is said so, because by applying the Qardh it means that there will be a cut some of the lender's property by providing the loan to the borrower. While Hassan means a kindness. In other words, the practice of Hassan is understood as an act that benefits other persons. Qardhul Hassan can be divine an interest-free loan in the Islamic religion, or zero-return loan that Al-Quran urges Muslims to Make available to the needy. In other words, the borrower only needs to pay back the principal amount without any obligation for an additional amount. However, the borrower is encouraged and may pay an additional or extra amount at his/her absolute discretion as a token of appreciation, so long as it is not stated in the contract between the two parties. In addition, Qardhul Hassan is an example of a unique instrument offered by Islamic Financial Institutions ("IFIs") as compared to their counterparts, the conventional financial institution. Moreover Qardhul Hassan is an effective means of economic development and Poverty alleviation. Some Muslim scholars named Qardhul Hassan Islamic Alternative of the interest. It is interesting to observe that the Qardhul Hassan has been so far seriously neglected by many Islamic banks. Although it is always discussed to be one of product or services the Islamic Banks can offer, but few – as later confirmed by this study– have implemented this particular product. This is among the important reasons why so many studies were conducted. Qardhul Hassan is one of main things based on charity Zakat and waqaf concerning the redistribution of income and wealth and, therefore, is needed for the welfare of the society. The prohibition of Riba is very significant and is always brought into any discussion of Islamic Finance contracts. As such, generally, Qardhul Hassan is urged in Islam not just because of its uniqueness and flexibility but also because of prohibition and therefore no involvement of riba, 1...