FatwaFederal TerritoriesTransactions & Finance
IRSYAD HUKUM SIRI KE-774: CAJ PEMBAYARAN LEWAT DALAM SISTEM KEWANGAN ISLAM
Can Islamic financial institutions impose late payment charges or penalties on borrowers who delay repaying their debt?
Short answer
Late payment charges imposed purely for profit and that compound are classed as prohibited riba and may not be taken as income.
A reference, not a fatwa. First sentence of the summary below — read the original fatwa and consult your state authority before acting.
- Authority
- Federal Territories Mufti Office
- Date
- Status
- Opinion (irsyad)
- Series
- Irsyad al-Hukum (Umum)
- Topic
- Transactions & Finance
No evidence of gazettement in the source — this is not a gazetted fatwa.
Summary
Late payment charges imposed purely for profit and that compound are classed as prohibited riba and may not be taken as income. However, a charge representing the institution's actual loss (ta'widh) caused by the customer's delay is permitted under Bank Negara Malaysia guidelines. Ta'widh may only be charged after the agreed repayment period ends, must not exceed 1% of the outstanding amount and must not be compounded. Any amount beyond the actual loss is gharamah and must go to charity, otherwise it amounts to riba al-jahiliyyah.
Written in our own words from the original fatwa — check the source before acting on it.
Penalti atau caj pembayaran lewat yang dikenakan untuk memperoleh keuntungan semata-mata dan bersifat gandaan (compounding) adalah termasuk dalam kategori riba yang diharamkan dan tidak boleh diambil atau dimanfaatkan sebagai pendapatan.
Read the full fatwa on the Federal Territories website (new tab)
How to cite
Cite the original fatwa and its authority. Rujuk Fatwa is only where you found it.
Federal Territories Mufti Office. “IRSYAD HUKUM SIRI KE-774: CAJ PEMBAYARAN LEWAT DALAM SISTEM KEWANGAN ISLAM”, 24 May 2023. https://muftiwp.gov.my/ms/artikel/irsyad-hukum/umum/5652-irsyad-al-fatwa-siri-ke-774-caj-pembayaran-lewat-dalam-sistem-kewangan-islam. Found via Rujuk Fatwa: https://rujukfatwa.com/en/fatwa/ruling-on-late-payment-charges-islamic-finance/