A Sharia’h Perspective of Minimum Account Balance Requirement in Islamic Banking

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Bibliographic Information
Journal Al-Idah
Title A Sharia’h Perspective of Minimum Account Balance Requirement in Islamic Banking
Author(s) Ahmad, Muhammad Mushtaq, Muhammad Farooq, Niaz Muhammad, Shakir Ullah
Volume 25
Issue 2
Year 2012
Pages 72-86
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Keywords Islamic Banking, Minimum Balance

Requirement, Levy on Accounts, Shari’a,

Deposits
Chicago 16th Ahmad, Muhammad Mushtaq, Muhammad Farooq, Niaz Muhammad, Shakir Ullah. "A Sharia’h Perspective of Minimum Account Balance Requirement in Islamic Banking." Al-Idah 25, no. 2 (2012).
APA 6th Ahmad, M. M., Farooq, M., Muhammad, N., Ullah, S. (2012). A Sharia’h Perspective of Minimum Account Balance Requirement in Islamic Banking. Al-Idah, 25(2).
MHRA Ahmad, Muhammad Mushtaq, Muhammad Farooq, Niaz Muhammad, Shakir Ullah. 2012. 'A Sharia’h Perspective of Minimum Account Balance Requirement in Islamic Banking', Al-Idah, 25.
MLA Ahmad, Muhammad Mushtaq, Muhammad Farooq, Niaz Muhammad, Shakir Ullah. "A Sharia’h Perspective of Minimum Account Balance Requirement in Islamic Banking." Al-Idah 25.2 (2012). Print.
Harvard AHMAD, M. M., FAROOQ, M., MUHAMMAD, N., ULLAH, S. 2012. A Sharia’h Perspective of Minimum Account Balance Requirement in Islamic Banking. Al-Idah, 25.

Abstract

ABSTRACT: Banks charge fee on saving and current accounts or downgrade them when the balance drops below a threshold point. This could be justified in conventional banking on pure business grounds; however, it is an issue of concern in Islamic banking because of the underlying Shari’a (Islamic Law) issues in this practice. While some Islamic banks charge incidental fees, as practiced by conventional banks, on accounts with low balances, others simply stop paying profits on such savings accounts and some even downgrade them by stopping some of the free sendees. This conceptual paper addresses the Shari'a aspect of such practices in Islamic banking. The paper first presents a broader picture of Islamic banks’ practices in relation to this issue and then explores relevant Shari'a principles. The current market practices are then analyzed in light of Shari’a principles. The findings reveal that imposing restrictions/ charges on low-balance savings and current accounts are against the basic tenets ofShari’a principles. The implications of the paper are twofold. Firstly, it opens up a whole new dimension of literature in the field of Islamic banking by instigating an important untouched area. Secondly, it strongly recommends that Islamic banks reconsider their practices in this regard in order to stay viable in the long run. The paper also gives alternative recommendations for addressing the problem in a Shari’a compliant way

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