Sharia Supervisory Board
Sharia Board Rulings — Guarantees
The Board's rulings on guarantees and letters of guarantee: when a guarantee is valid, what counts as cover, and the limits on issuance fees.
Sharia Board Rulings — Guarantees
What this document covers
Guarantees and letters of guarantee
- A guarantee given by a car dealership on a customer's behalf is valid even if the customer is unaware of it, because the guarantor acts voluntarily.
- No fee may be charged for standing as guarantor; only actual costs incurred may be recovered.
- A letter of guarantee secured by a property mortgage — or by the customer's commercial standing — counts as uncovered, and is priced under the Board's approved fee bands.
- A property mortgage becomes cover only where the customer authorises the bank to sell the mortgaged property.
- A guarantee issued by a conventional bank in favour of a customer may be accepted: what the bank must examine is the lawfulness of its own dealing with its customer.
- Anything charged above the actual cost of issuing a letter of guarantee belongs to the customer and is returned to them.
- The bank may not guarantee a contract whose purpose contravenes Sharia.
The full Arabic text of every question and ruling is published on the Arabic version of this page. The signed original is below.
Original document
The text above is a transcription of the official document, published so it can be read, searched and translated on any device. The signed PDF below remains the authoritative copy.