This study aims to critically discuss the hibah offerings in muḍārabah investment accounts and develop necessary sharīʿah parameters and controls for providing hibah to fill the gap between actual and expected returns on muḍārabah deposits.
This study uses a qualitative approach, using a focus group discussion (FGD) method to collect primary data. A thematic analysis technique is used to explore and analyse qualitative data.
The study finds that offering hibah to fill the gap between actual and expected returns on muḍārabah deposits falls under the purview of the general permissibility of financial transactions in Islamic law, provided it does not trigger any sharīʿah violation. Participants in the FGDs concurred that the hibah offerings should be at the discretion of the institutions. Providing hibah should not be a contractual, binding or regular practice. A contractual and regular hibah resembles a guaranteed profit. Depositors should be duly informed about hibah so that they do not consider it profit. Besides, the amount of hibah should be varied based on the cases and circumstances, and it should not be an amount to equalise the exact figure of expected returns. Finally, all hibah-giving cases shall be endorsed by the sharīʿah supervisory committee and other relevant bodies of the financial institutions.
This study helps regulators and policymakers develop policy documents and regulate the hibah practice accordingly. It also assists sharīʿah scholars in making sharīʿah decisions regarding hibah offerings. The study also supports Islamic financial institutions by ensuring the proper application of hibah policy in muḍārabah deposits. The sharīʿah parameters and controls developed by this study contribute to preventing the misuse of hibah practice when a guaranteed return is offered under the name of hibah.
Improper hibah offerings in muḍārabah deposits create a misperception that Islamic deposits are like conventional ones in providing guaranteed returns. The outcome of this study contributes to removing this perception and makes stakeholders realise the difference between a discretionary hibah and a guaranteed return on deposits.
This study makes a significant contribution to the body of knowledge, as no previous research has developed sharīʿah parameters and controls for providing hibah in muḍārabah deposits. The study will also play a vital role in ensuring the appropriate application of hibah offerings to fill the gap between the actual and expected returns on muḍārabah deposits.
