Writing off debts owed by others after hope of recovery has been lost
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Fatwa No. ( 20428 )
Q: Among the issues regarding which we have not clarified the Shari'ah perspective is the issue of writing off debts owed to the company by others, resulting from various circumstances , including: 1. Those who obtain certificates of insolvency. 2. Those who embezzle and flee from the Kingdom before their case is exposed, leaving the company with no option but to pursue them through Interpol or by suing them in their home countries, which in most cases yields no result. 3. Those who pass away without leaving an estate sufficient to cover the debt they owe the company. 4. When the debt is small and collecting it costs the company more than the amount owed. Banks suffer unusual hardship in these cases in enforcing their rights against debtors, leading to the consensus to write off these debts, which is the established custom.
Since Al-Rajhi Bank for Investment is a capital company (a joint-stock company) managed by a board of directors appointed by the general assembly of shareholders, and it is not within their authority to donate the company's funds, although they have the authority to release the company's debtors from their obligations as stipulated in its founding charter. Furthermore, it is impossible for all shareholders to be present, and indeed, its owners, who are the shareholders, change daily through the buying and selling of its shares in the stock markets. Therefore, I ask your Eminence to issue a ruling on these cases: Is it permissible for the company's board of directors to write off the debts in these cases and similar ones, or not?
A: After the Committee studied the inquiry and reviewed the attached company regulations regarding this matter, it responded that it is not permissible for the company's board of directors to write off the debts in the mentioned cases. Rather, it is obligatory for them to make every possible effort to collect all the Shari'ah rights owed to the company from the insolvent, the embezzlers, and others. This is based on the saying of Allah, Mighty and Majestic:[An-Nisa 4:58], and His saying, Exalted is He, regarding the attributes of the believers: [Al-Mu'minun 23:8], and His saying, Mighty and Majestic:
[Al-Anfal 8:27] and His saying, the Exalted: [At-Taghabun 64:16]. And the saying of the Prophet (peace and blessings be upon him): Sunan Ibn Majah 2400Da'if (Darussalam). And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: Among the issues regarding which we have not clarified the Shari'ah perspective is the issue of writing off debts owed to the company by others, resulting from various circumstances , including: 1. Those who obtain certificates of insolvency. 2. Those who embezzle and flee from the Kingdom before their case is exposed, leaving the company with no option but to pursue them through Interpol or by suing them in their home countries, which in most cases yields no result. 3. Those who pass away without leaving an estate sufficient to cover the debt they owe the company. 4. When the debt is small and collecting it costs the company more than the amount owed. Banks suffer unusual hardship in these cases in enforcing their rights against debtors, leading to the consensus to write off these debts, which is the established custom.
Since Al-Rajhi Bank for Investment is a capital company (a joint-stock company) managed by a board of directors appointed by the general assembly of shareholders, and it is not within their authority to donate the company's funds, although they have the authority to release the company's debtors from their obligations as stipulated in its founding charter. Furthermore, it is impossible for all shareholders to be present, and indeed, its owners, who are the shareholders, change daily through the buying and selling of its shares in the stock markets. Therefore, I ask your Eminence to issue a ruling on these cases: Is it permissible for the company's board of directors to write off the debts in these cases and similar ones, or not?
A: After the Committee studied the inquiry and reviewed the attached company regulations regarding this matter, it responded that it is not permissible for the company's board of directors to write off the debts in the mentioned cases. Rather, it is obligatory for them to make every possible effort to collect all the Shari'ah rights owed to the company from the insolvent, the embezzlers, and others. This is based on the saying of Allah, Mighty and Majestic:
Indeed, Allah commands you to render trusts to whom they are due
إِنَّ اللَّهَ يَأْمُرُكُمْ أَنْ تُؤَدُّوا الأَمَانَاتِ إِلَى أَهْلِهَاAnd they who are to their trusts and their promises attentive
وَالَّذِينَ هُمْ لأَمَانَاتِهِمْ وَعَهْدِهِمْ رَاعُونَO you who have believed, do not betray Allah and the Messenger or betray your trusts while you know [the consequence].
يَا أَيُّهَا الَّذِينَ آمَنُوا لاَ تَخُونُوا اللَّهَ وَالرَّسُولَ وَتَخُونُوا أَمَانَاتِكُمْ وَأَنْتُمْ تَعْلَمُونَSo fear Allah as much as you are able
فَاتَّقُوا اللَّهَ مَا اسْتَطَعْتُمْThe hand that takes is responsible for what it has taken until it returns it.
على اليد ما أخذت حتى تؤديه
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.