Remember my earlier post on the issue of Wadiah versus Qard? Well, my lecturer did provide a case study to substantiate the issue, which I have reproduced here :
Al-Zubayr Ibn Al-Awwam was a Companion of the Prophet Muhammad s.a.w., and one of the ten who were promised paradise. People always wanted to deposit their money with him (wadiah) for his honesty. If he took it as wadiah, his liability would be fault-based had the money been lost while in his custody - which means, that with no negligence or wongful doing on his part, the owner could not sue him for the loss. Neither could the owner sue him for loss due to factors beyond human ability to guard against natural hazards or disasters.
However, he could not utilize the wadiah for his own purposes as a trustee because wadiah is only for safekeeping.
What he did was asking the people to deposit the money with him as qard/loan instead of as wadiah. Now, his shariah legal position has changed to that of a borrower. As a borrower, he assumed the duty to repay the owner in whatever circumstances. He also assumed ownership over the money and risk of loss was transferred to him. As such, it was legitimate for him to utilize the fund for his own purposes.
It was reported that he managed to make nearly 3 million dinars in the venture : this was halal return based on risk for return principle.
Point to note :
Benefit to Al Zubayr (as borrower)
a) He can use the money any way he likes
Benefit to the lender (the depositors)
a) Full guarantee of payment by borrower (in whatever circumstances)
The Qard principle, if used in the Islamic banking system for savings and current accounts, proves to be a win-win situation for all parties.
Al-Zubayr Ibn Al-Awwam was a Companion of the Prophet Muhammad s.a.w., and one of the ten who were promised paradise. People always wanted to deposit their money with him (wadiah) for his honesty. If he took it as wadiah, his liability would be fault-based had the money been lost while in his custody - which means, that with no negligence or wongful doing on his part, the owner could not sue him for the loss. Neither could the owner sue him for loss due to factors beyond human ability to guard against natural hazards or disasters.
However, he could not utilize the wadiah for his own purposes as a trustee because wadiah is only for safekeeping.
What he did was asking the people to deposit the money with him as qard/loan instead of as wadiah. Now, his shariah legal position has changed to that of a borrower. As a borrower, he assumed the duty to repay the owner in whatever circumstances. He also assumed ownership over the money and risk of loss was transferred to him. As such, it was legitimate for him to utilize the fund for his own purposes.
It was reported that he managed to make nearly 3 million dinars in the venture : this was halal return based on risk for return principle.
Point to note :
Benefit to Al Zubayr (as borrower)
a) He can use the money any way he likes
Benefit to the lender (the depositors)
a) Full guarantee of payment by borrower (in whatever circumstances)
The Qard principle, if used in the Islamic banking system for savings and current accounts, proves to be a win-win situation for all parties.
**The ten people promised paradise (Arabic: Al-Asharatu Mubashshirun or Al-Mobashareen Bel-Jannah) are :
- Abu Bakr As-Siddiq (51 B.H - 13 A.H; 573 - 634 C.E)
- Umar bin Al-Khattab (40 B.H - 23 A.H; 584 - 644 C.E)
- Uthman ibn Affan (47 B.H- 35 A.H; 577-656 C.E)
- Ali ibn Abi Talib (23 B.H - 40 A.H; 600 - 661 C.E)
- Talha ibn Ubayd-Allah (28 B.H - 36 A.H; 596 - 656 C.E)
- Zubayr ibn al-Awwam (28 B.H - 36 A.H; 596 - 656 C.E)
- Abd al-Rahman ibn Awf (d. 31 A.H; 654 C.E)
- Sa'ad ibn Abi Waqqas (23 B.H - 55 A.H; 600 - 675 C.E)
- Abu-Ubaida ibn al-Jarrah (40 B.H-18 A.H; 584-640 C.E)
- Said ibn Zayd (d. 51 A.H; 671 C.E)
