Bank Guarantee Letter: Issues and Alternatives Economic Jurisprudential Study

Abdul Aziz, Soad

doi:10.21608/zjac.2025.309681.1177

Bank Guarantee Letter: Issues and Alternatives Economic Jurisprudential Study

Document Type : Original Article

Author

soad abdul aziz

PhD in Islamic Sharia from the Faculty of Dar Al-Ulum, Cairo University - Arab Republic of Egypt

10.21608/zjac.2025.309681.1177

Abstract

Bank Guarantee Letter: Issues and Alternatives
Economic Jurisprudential Study
Soad Abdul Aziz Farhan Al-Ali
Department of Islamic Sharia, Faculty of Dar Al-Uloom, Cairo University, Cairo, Arab Republic of Egypt.
Email: dr.suad@17gmail.com
Abstract:
This study addresses the issue of bank guarantee letters, examining their various forms and the way they are issued. It also discusses the jurisprudential opinion of this transaction and the ruling on charging a fee for it. The aim of this study is to clarify the general rulings regarding the forms of bank guarantees letters, including the stipulation of fees for the issuance of these guarantees, as well as outlining the legitimate alternatives to uncovered guarantees, which may weaken the profit opportunities for financial institutions and expose them to loan risks. The study reaches several conclusions, the most important of which is that despite the differing legal perceptions of bank guarantees due to their various forms, the agency element is consistent across all types; a bank guarantee often entails a specific mandate to issue a document for a particular purpose. Furthermore, the study finds that it is not permissible to deal with uncovered bank guarantee systems if the fee is estimated according to the guaranteed amount and duration. If the fee is estimated according to the efforts exerted in issuing of documents and the guarantee, this constitutes a legitimate commission, as it reflects the actual effort exerted by the bank. The study also presents the justifications of some researchers regarding the permissibility of charging a fee based on the guarantee, indicating the weaknesses of these perspectives, as well as presenting legitimate alternatives to this transaction.

Keywords

Main Subjects

الفقه

References

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