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- Title
LATE PAYMENT IN ISLAMIC FINANCE.
- Authors
Muscati, Sina Ali
- Abstract
This paper addresses the issue of whether a creditor is entitled under the shari'a to charge a late payment fee to a delaying debtor, and appropriate Islamic penalties for late payment. After introducing the basic Islamic concepts concerning riba and incurring debt, the paper examines the spectrum of Islamic responses that have been proposed regarding the issue of late payment. Such responses include those that consider any type of late fee to be a form of riba, those allowing debtors guilty of delinquency to be penalized, those allowing late fees whose proceeds are donated to charity, and those that compensate actual damages suffered by the lender. The paper then assesses whether such Islamic approaches to late payment offer a meaningful alternative to conventional approaches, and suggests changes that might help spur a new culture of Islamic finance that will revitalize and improve the competitiveness of the industry.
- Subjects
DEBTOR &; creditor; PAYMENT; DEBT; INTEREST (Islamic law); BANKING law &; legislation (Islamic law); FINANCIAL services industry
- Publication
UCLA Journal of Islamic & Near Eastern Law, 2007, Vol 6, Issue 1, p47
- ISSN
1536-5107
- Publication type
Article