Gharamah

In classical Islamic law, “gharamah” denotes the debtor’s duty to settle the debt and is frequently accompanied by monetary sanctions. This term encompasses the ability to release the debtor’s obligations, whether they arise from contractual or contract-related transactions. Civil or criminal payments, inspired by torts against outsiders and goods, as well as liberal religious-legal norms, form the principal foundation of the debtor’s responsibilities within the Islamic legal system. If the payment is aimed at systematizing it, it is referred to as “tazminat,” while if it involves a financial penalty, it is known as “gharamah.” The benefits of compensation or financial punishment differ among law schools. Islam has adopted an organized procedure for punishment and compensation, taking into account evolving religious and legal norms. Compensation serves as a secondary sanction in civil liability, while Islamic criminal law provides specificity for material-bodily penalties. Financial penalty is frequently utilized as an alternative and enduring form of punishment. In Islamic banking, it is practically implemented as a penalty for delayed payments. Islamic financial management in Malaysia regards gharamah as a constituent of the late payment expenditures. This practice aligns with conventional Islamic jurisprudence in which debtors are financially accountable for overdue payments. As a practical solution, adhering to Sharia principles ensures sustainability of Islamic banking practices.