Editing Islamic banking and finance (section)

===Contracts of safety, security, service===
These contracts are intended to help individual and business customers keep their funds safe.<ref name=IFDCS/>

====Hawala====
{{further|Hawala}}
''[[Hawala]]'' (also ''Hiwala'', ''Hewala'', or ''Hundi''; literally "transfer" or "trust") is a widely used, informal [[informal value transfer system|"value transfer system"]] for transferring funds from one geographical area to another, based not on [[wire transfer]]s but on a huge network of money brokers (known as "Hawaladars") throughout the Muslim world.<ref name=treasury/> 
''Hawala'' was not started as an ''[[halal]]'' alternative to conventional banking transfers, since electronic wire transfers have not been found in violation of sharia. However, ''hawala'' has the advantage of being available in places wire transfer is not,<ref name="Vaknin">{{cite web |last1=Vaknin |first1=Sam |title=Hawala, or the Bank that Never Was |url=http://samvak.tripod.com/nm104.html |website=samvak.tripod.com |access-date=5 September 2017 |date=June 2005 |archive-url=https://web.archive.org/web/20170920054104/http://samvak.tripod.com/nm104.html |archive-date=20 September 2017 |url-status=dead }}</ref> and predates conventional banking [[remittance]] systems by many centuries.

In the first half of the 20th century it lost ground to instruments of the conventional banking system, but regained it starting in the late 20th century with the economic migration of Muslim workers to wealthier countries in the West and the Gulf and their need to send money home.<ref>{{Cite book|url=https://books.google.com/books?id=DQJeCwAAQBAJ&q=hiwala&pg=PA24 |title=Islamism: What it Means for the Middle East and the World |last=Osman|first=Tarek| publisher=Yale University Press|year=2016 |isbn=9780300216011|pages=24| language=en}}</ref> Dubai has traditionally served as a hub.<ref name="treasury">{{Cite web|url=https://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/FinCEN-Hawala-rpt.pdf|title=Hawala|website=treasury.gov|publisher=Financial Crimes Enforcement Network with Interpol/FOPAC|access-date=16 October 2016}}</ref>

''Hawala'' is based on a short term, discountable, negotiable, promissory note (or bill of exchange) called "Hundi",<ref name="Vaknin"/> transferred from one debtor to another. After the debt is transferred to the second debtor, the first debtor is free from his/her obligation.<ref name="IFDCS"/> Recipient of the funds often identify themselves with passwords given to them by the sender.<ref name="IMFFSD-2005-30-2">{{cite book|last1=International Monetary Fund. Monetary and Financial Systems Dept |title=Regulatory Frameworks for Hawala and Other Remittance Systems |date=2005|pages=30–32 |publisher=International Monetary Fund |url=https://books.google.com/books?id=Drq18kMTTKIC&q=hawala&pg=PA31 |access-date=2 September 2017|isbn=9781589064232 }}</ref> Hawaladars are often small traders who work at ''hawala'' as a sideline or moonlighting operation.<ref name="Vaknin"/> Hawaladars networks are usually family or clan-based,<ref name="Vaknin"/> and enforcement of the contracts is based on these networks rather than the power of the state.<ref name="Vaknin"/>

====Kafala====
''Kafala'' (literally "guarantee),<ref name="IBRC-kafala">{{cite web|title=Synopsis of 2013 BNM Exposure Drafts|url=https://islamicbankers.me/tag/kafala/|website=Islamic Bankers Resource Centre|date=24 December 2013 |access-date=2 September 2017}}</ref> is called "surety" or "guaranty" in conventional finance. A third party accepts an existing obligation and becomes responsible for fulfilling someone's liability.<ref name=IFDCS/>

====Rahn====
''Rahn'' (collateral or pledge contract) is property pledged against an obligation.<ref name="FJIFD2012:97">[[#FJIFD2012|Jamaldeen, ''Islamic Finance For Dummies'', 2012]]:97</ref> A ''rahn'' contract is made in order to secure a financial liability.<ref name=IFDCS/> According to [[Mecelle]], ''rahn'' is "to make a property a security in respect of a right of claim, the payment in full of which from the property is permitted." Hadith tradition states that the Islamic prophet Muhammad purchased food grains on credit pledging his armor as ''rahn''.<ref name="Kureshi-2015-159">{{cite book|last1=Kureshi|first1=Hussein|last2=Hayat|first2=Mohsin|title=Contracts and Deals in Islamic Finance: A UserÂs Guide to Cash Flows ...|date=2015|publisher=John Wiley & Sons|page=159|url=https://books.google.com/books?id=FRcHBgAAQBAJ&q=Rahn+islamic+finance&pg=PA159|access-date=27 September 2017|isbn=9781119020578}}</ref>

==== Wakalah====
In a ''Wakalah'' contract, a person (the principal or ''muwakkel'') appoints a representative (the agent or ''wakil'') to undertake transactions on his/her behalf, that the principal does not have the time, knowledge or expertise to perform themselves – similar to a [[power of attorney]] agreement in conventional legal terms. Wakalah should be a non-binding contract for a fixed fee. The agent's services may include selling and buying, lending and borrowing, debt assignment, guarantee, gifting, litigation and making payments, and are involved in numerous Islamic products like ''Musharakah'', ''Mudarabah'', ''Murabaha'', ''Salam'' and ''Ijarah''.<ref>{{cite web |url= http://www.deposits.org/dictionary/term/wakalah/ |title= Wakalah |website=depostis.org |access-date= 24 July 2016}}</ref>

An example of ''wakalah'' is found in a ''mudarabah'' profit and loss sharing contract (above) where the ''mudarib'' (the party that receives the capital and manages the enterprise) serves as a ''wakil'' for the ''rabb-ul-mal'' (the silent party that provides the capital) {{#tag:ref|(although the ''mudarib'' may have more freedom of action than a strict ''wakil'').<ref name="Kureshi-2015-152">{{cite book|last1=Kureshi|first1=Hussein|last2=Hayat|first2=Mohsin|title=Contracts and Deals in Islamic Finance: A UserÂs Guide to Cash Flows ...|date=2015|publisher=John Wiley & Sons.|page=152|url=https://books.google.com/books?id=FRcHBgAAQBAJ&q=wakalah&pg=PA152|access-date=27 September 2017|isbn=9781119020578}}</ref>|group=Note}}