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Case Sharia Banking (chapt. 12)
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Case of Sharia Banking about Qard Financing
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QUIZ SESSION 121. Explain what the meaning Qard financing, and give an example of Qard financing
Qard is a financing that made into loan agreement that must be returned with the same
amount at the agreed time. This loan is given by someone to another who will use it for
urgent needs. The payment can be made into installments or full at once. To better
understanding, the loan itself is an interest-free loan. The loan itself without interest, mark-
up, or a share for the business that using this kind of loan because the lending money in
return can be identify as Riba.
For example, Adam borrows money in total of 4 million from bank for covering needs of his
business. The bank will set the time for Adam to pay his installments according to the time
the two parties already agreed on. If Adam late on or cannot pay all the installments until end
of the agreement period, bank can add more time for him or erase (white off) some or all his
needs to pay back.
2. Explain the source of Qard financing funds?
Qard was run as social banks. Based on Fatwa MUI, Qard funding comes from:
1. Part capital of Sharia Financial Institutions
2. Profit of Sharia Financial Institution that are set aside
3. Other institutions or individuals entrusting their infaq to Sharia Financial Institutions.
3. Explain the benefits for banking and consumer for Qard financing
For sharia banks: The social mission of this contract can increase a positive image and
community loyalty to the banks.
For customers: They don’t have to pay interest since interest in Islam is forbidden, they can
pay back the funds in once or by installments (according to their conditions), they can get the
fund for instance since the needs are urgent.
4. Describe the Qard financing process below
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