Islamic Finance - Systems for paying with checks and insufficient client funds
The circumstance that could develop while dealing with check payment systems is another factor to take into account in a Shari'ah-compliant payment system. An Islamic bank could occasionally come upon a circumstance where the payer doesn't have enough money. Here, the Islamic paying bank has the choice of either rejecting the payment or honoring it by providing the payer with a short-term facility, such as a Qard/Hassan interest-free loan. The kind of contract used for the aforementioned short-term facility governs the fees that the bank may impose; for example, a Qard contract forbids the bank from recovering any further costs for the facility. The bank may be required to pay an administration fee that is proportionate to the actual costs spent
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May 2023
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