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Home > QFINANCE Dictionary > Definition of kafalah

Definition of



agreement to pay debt of another who defaults in Islamic financing, an agreement in which one party assumes responsibility for the debt of another if the debtor should fail to pay

kafalah - Related Articles
  • Islamic Microfinance: Fulfilling Social and Developmental Expectations

    Best Practice

    In the banking-oriented IMF, management of risk by the institution also becomes an important aspect of the process—based on the guarantee (or kafalah) and collateral (daman). The former is used as an alternative risk management tool for default and delinquency in the case of financing individual microfinance arrangements, while mutual kafalah is commonly used by IMF institutions in the case of group financing
    By Mehmet Asutay

  • Islamic Microfinance


    Takaful insurance is based on the principle of shared responsibility and has been practiced in one form or another for well over 1,000 years. As a mutual-style concept, takaful does not function on conventional profit-making lines. It derives from the Arabic word kafalah, which means a joint

  • The Emergence and Development of Islamic Banking

    Best Practice

    services, fund placements, and trust services.KafalahA pledge given to a creditor that the debtor will pay the debt, fine, or liability. A third party stands surety for the payment of the debt if unpaid by the person originally liable.Mudarabah (Trustee finance contract)The Rabb-ul-mal (owner of the capital
    By Umar Oseni, M. Kabir Hassan


Definitions of ’kafalah’ and meaning of ’kafalah’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’kafalah’ and other financial terms with our online QFINANCE Financial Dictionary.

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