Bank Guarantee

Islamic Bank Guarantee (IBG) is an indemnity letter issued by an Islamic bank to the customer in the form of a guarantee under the principles of kafālah in which the bank becomes liable if the customer fails to perform his obligation to the third party. It is a binding written obligation issued by the bank to assure the beneficiary the due payment as specified in the letter of guarantee if any form of default occurs by its customer. This facility usually functions to protect beneficiaries (e.g., government departments and statutory bodies) against non-fulfillment of the bank customer’s obligations. Thus, the issuing bank undertakes the risk and liability on behalf of the beneficiary. In return, the customer pays a certain amount charged by the bank. If the customer fails to fulfill his obligation, the issuing bank will pay the beneficiary and claim accordingly from the customer to reimburse the payment made.


Can an Islamic Bank State in an L.C. or Letter of Guarantee That the Fee Charged by a Conventional Bank Shall Be Obtained from the Beneficiary?
Resolution No. 12 (2/12): Letter of Guarantee
Can an Islamic Bank Issue a Guarantee for a Contractor Doing Work for a Conventional Bank?
Can the Murabahah Seller Take a Mortgage from the Purchase Undertaker before It Buys the Subject of the Contract?
What’s the Committee’s Opinion Regarding the Following Proposals: Accepting Deposits, Execution of Banking Services and Financing & Investment Operations?
Letter of Guarantee Amendments
Is it Allowed to Issue a Letter of Guarantee to a Client for his Debt Owed to a Commercial Bank and Secured by Real Estate Mortgage Insurance?
Is it Permissible to Increase the Current Fee Charged for Issuing Letters of Guarantee Providing That There Are Additional Indirect Costs?
Is it Permissible to Increase the Current Fee Charged for Issuing Letters of Guarantee Providing That There Are Additional Indirect Costs?
Is it Allowed to Issue a Performance Bank Guarantee in Favor of a Local Bank as a Security for the Payment of Debt Incurred by a Deceased Parent?
Is it Allowed for KFH to Issue a Performance Bank Guarantee in Favor of the Ministry of Information to Grant a Company an Exclusive Sponsorship to Have Commercials on Specified Channels?
Is it Allowed for KFH to Take a Fee in Return for the Facilities Granted to the Customer in a Letter of Guarantee?
Is It Allowed to Calculate the Fee for a Letter of Guarantee as a Percentage of the Value of the Letter of Guarantee as a Consideration for Additional Services?
What’s the Shariah Opinion Regarding Calculating a Fee for Letters of Guarantee?
RESOLUTION No. 12 (12/2): THE LETTER OF GUARANTEE
Client Guarantee for Commodity Soundness in Murabahah Transactions
Arrival of the Goods Prior to the Arrival of the Documents in Murabahah Transactions

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