NUR FARRAH AIN ZAINUDDIN

125964
NOOR HAFIZAH BT MOHAMAD SALLEH
125992
DEBT MANAGEMENT
ACCORDING
TO AL-QURAN
 Debt is duty or obligation to pay
money, deliver goods, or render
service under an express or
implied agreement.
 Allah says in Sura Al-Baqarah, in the verse on debt:
 “O you who believe! When you contract a debt for a fixed period, write it down. Let a scribe write it down in
justice between you. Let not the scribe refuse to write as Allah has taught him, so let him write. Let him (the
debtor) who incurs the liability dictate, and he must fear Allah, his Lord, and diminish not anything of what he
owes. But if the debtor is of poor understanding, or weak, or is unable to dictate for himself, then let his guardian
dictate in justice. And get two witnesses out of your own men. And if there are not two men (available), then a man
and two women, such as you agree for witnesses, so that if one of them (two women) errs, the other can remind
her. And the witnesses should not refuse when they are called (for evidence). You should not become weary to
write it (your contract), whether it be small or big, for its fixed term, that is more just with Allah; more solid as
evidence, and more convenient to prevent doubts among yourselves, save when it is a present trade which you
carry out on the spot among yourselves, then there is no sin on you if you do not write it down. But take witnesses
whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such
harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All-Knower
of each and everything.
  EXPLAINATION THE VERSE ACCORDING TO
Sheikh Muhammed Salih Al-Munajjid

 HE STATED SIX MAIN POINTS IN THE CORRECT

WAY OF LENDING MONEY
› specify the period of the loan
› the loan must be written down and also the time when it is to
be repaid
› the one who writes down the loan is a person other than the
debtor, then the debtor is the one who should dictate to him
the details of the loan
› if the debtor in unable to dictate because of sickness or some
other reason, then the one who should dictate on his behalf is
his guardian.
› the loan should be witnessed, and the witnesses should be
two men, or one man and two women.
› the lender has the right to ask the borrower to guarantee the
loan with a pledge which the lender will keep.
 The first hadith that narrated form Abu Huraira : The
Prophet said,

 "Whoever takes the money of the people with the

intention of repaying it, Allah will repay it on his
behalf, and whoever takes it in order to spoil it, then
Allah will spoil him."  
 2 part :
› Transaction in which payment and delivery
are made on the spot
› Transaction involving future payment
 Transaction in which payment and delivery are
made on the spot

› No written evidence is required except oral witnesses

and even the oral evidence can be dispensed with if
the parties trust each other.
 Transaction involving future payment

› The Qur’an recommends witnesses and documentation

› Ibn Hazm considers the witnesses necessary in this case
› Witnesses – provide safeguards against disputes that may
arise in the absence of documentation and witnesses and
allow loan trannsaction for a fixed or known time period.
 Transaction involving advance payment:

› Salam : A price is paid in advance for a specifies

commodity to be delivered at an agreed time in the
future
› Bai Muajjal : Sale for a price to be paid in the future
 The holy Qur’an encourages creditors to give more time for
payment, or even to waive the loan amount, if the debtor in in
dire straits (Surah Al-Baqarah,282)
 In a case a debt with a settled due date, the creditor cannot
ask for earlier repayment so long as the debtor does not
transgress the terms and conditions
 However, if the creditor is not inclined to give more time for
payment, he cannot be compelled to do so and the debtor
would then be required to pay one way or another.
 Zakat on creditor (Lender)

 Debt is countable for zakat in case it considered

recoverable from the borrower
 Once recovered, zakat is payable for one year only
(no matter how many years it has be owed by
borrower)
 Zakat on debtor (Borrower)

 The amount of debt owed is to be exclude from the portion liable to zakat

 A payer of Zakat who has more than one type of property counted for Zakat
may specify a certain type of these properties to repay his debt there from and
dedicate the rest, which should be more beneficial to the poor, to Zakat.

 In long term, installment debts, like housing installments, and other debts that
finance fixed assets, which are not counted for Zakat, the payer deducts the
amount of annual installment all at a time, then calculates the total sum of the
remaining property and pays Zakat on it if it reaches the Nisab of Zakat.
 Loans that are invested to finance any commercial business are to be
deducted from the total sum liable to Zakat, in case the payer does not
have fixed assets exceeding his basic needs.
 Loans invested to finance industrial projects are to be deducted from the
total sum of properties counted for Zakat, in case the debtor has no fixed
assets exceeding his basic needs to cover these loans. However, in case
there are fixed assets to cover these loans, they will not be deducted from
the total sum of the properties counted for Zakat.
 In case the amount of these fixed assets falls short from covering the
whole amount of loans, the remaining uncovered portion is to be deducted
from the total sum counted for Zakat. In case of deferred investment
loans, only the amount of the annual installment, which falls due, is
deducted.
 “Alms are for the poor and the needy; and those employed to
administer (the funds); for those whose hearts have been
(recently) reconciled (to truth); for those in bondage and in
debt; in the cause of Allah; and for the wayfarer: (thus is it)
ordained by Allah, and Allah is full of knowledge and
wisdom." (Al-Qur'an, 9: 60)
Recipient of zakat :
 Fuqara’
 Masakeen
 Al-Amileen
 Muallafatul Qulub
 Ar-Riqaab – slaves that are permitted to work and have an
agreement from their masters to purchase their freedom on
payment of fixed amounts.
 Al-Gharimeen
 Fi-sabilillah
 Ibnu Sabeel
 The people in debt are of two kinds:

i. The guarantor, who takes the responsibility of someone

else's debt so as to reconcile the two warring parties, to
extinguish the fire of fitnah between them. If the person
requests Zakat money to pay off this debt he should be given
it, which will encourage him to continue in this noble cause.
 In a hadith reported by Qubaysah Al-Hilaaly (raa), he said I was under
debt (hamaalah) and I came to the Messenger (saws) and begged him to
help me pay it off. The Messenger told him: "Wait until we receive
charity, so we will command that it be given to you." However, the
Messenger stated: "O Qubaysah, begging is not permitted except for one
of three categories of people:
 A man who has incurred debt (as guarantor to reconcile blood wit) for
him begging is permissible till he pays that off, after which he must stop
it; a man whose property has been destroyed by calamity which has
smitten him; for him begging is permissible till he gets what will support
life or will provide him reasonable subsistence; and a man who has been
smitten by poverty, the genuineness of which should be confirmed by
three knowledgeable members of his people; for him begging is
permissible till he gets what will support him, or will provide him
subsistence. Besides these three, Qubaysah, begging is forbidden for
every other persons, and one who engages in such consumes that which is
forbidden." (Muslim)
ii. Whoever incurs debt and has no money to pay it back will be given
from Zakat to help pay his debt, whether the amount is large or
small; or his creditor should be paid directly on his behalf, so long
as it is paid off.

[Link]
 Debt is duty or obligation to pay money, deliver goods, or render service
under an express or implied agreement. While conventional banks deals in
money by taking and giving loans on interest, Islamic banks and financial
institutions may create debt through a variety of sales and leased contract.
In Qur’an, Allah has created a complete way to make a loan properly
according to Islam. Hence, Qur’an also guides one to commercial
morality of the highest standard in the most practical manner, as man has
been advised to do business as if all transaction are to be carried out as in
the presence of God Almighty.
 Paying off a debt in another currency is
permissible or not in Islamic point of view?
 The basic principle is that loans should be repaid in the same
currency as they were taken by the borrower, unless the two
parties agree at the time of repayment to repay it in a different
currency.

 It is permissible for the two parties to agree at the time of

repayment that it may be paid in a different currency, at the
current rate of exchange (not the rate of exchange that
existed on the day when the loan was given).