Possession in Loans and Its Contemporary Banking Applications A Case Study of Credit Limits

Abstract

Abstract:

This study aims to clarify the contractual relationship between the bank and the client underlying the unused credit limit in credit cards and deferred payment cards, providing a precise description based on its actual application. It further seeks to define the concept of possession (qabd) in loan transactions and to examine the various possible legal classifications (takyeef) applicable to the unused credit limit, ultimately identifying the most appropriate classification.

The study is divided into three sections: the first addresses the concept of loans and possession, along with clarifying related technical terms; the second discusses the issue of possession of loans from the perspective of Islamic jurists; and the third explores the matter of the credit limit in the context of the loan contract.

The study concludes with several findings, the most significant being that the researchers view the unused credit limit as constituting a loan contract established between the bank and the client. This aligns with the Mālikī position that a loan becomes binding upon contract conclusion, and with the Ḥanafī and Ḥanbalī schools, who require relinquishment (takhliah) for its establishment—a condition met in the case of the unused credit limit. Conversely, the Shāfiʿī school stipulates that actual utilization of the funds is necessary to establish possession, a condition not met in the unused credit limit.