IRP 90 – Tasarruf al-Fuduli: Its Concept and Potential Application in the Islamic Banking Industry in Malaysia

Taṣarruf al-fuḍūlī refers to a transaction entered into by a person on behalf of another, without or beyond the mandate given. It thus encompasses various forms of unauthorised agency. The concept has been extensively discussed in Islamic jurisprudence and was practiced even during the Prophet’s era. The issues surrounding the practice of taṣarruf al-fuḍūlī are still relevant in the present day.

The objective of the study is to explore the concept of taṣarruf al-fuḍūlī and its potential application in modern Islamic banking. A proposed parameter is also developed to ensure that the practice of taṣarruf al-fuḍūlī complies with the conditions put forward by the Muslim jurists in approving the concept. The study is expected to help regulators formulate appropriate guidelines for the application of taṣarruf al-fuḍūlī in the Islamic banking industry.