Wakalah in Islamic Finance

UAE Laws and Islamic Finance

 

Bank as Agent

“Wakalah means agency, or the delegating of a duty to another party for specific purposes and under specific conditions. Under this concept, the bank acts as your agent in completing a particular financial transaction. As your agent, the Bank will be paid a certain amount of fee for the services it provides.”

http://www.standardchartered.com.my/islamic-banking/about-islamic-banking/islamic-concepts/en/

Bank/Company as Agent

‘Wakalah is a contract whereby somebody (principal) hires someone else to act on his behalf i.e. as his agent for a specific task. The agent is entitled to receive a predetermined fee irrespective of whether he is able to accomplish the assigned task to the satisfaction of the principal or not as long as he acts in a trustworthy manner. He would be liable to penalties only if it can be proved that he violated the terms of the trust or acted dishonestly.

In the case of a financial wakalah…

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