Qarḍ Ḥasan, Wadī ʾah/Amānah and Bank Deposits: Applications and Misapplications of Some Concepts in Islamic Banking

Based on the categorical prohibition of ribā in the Qurʾān, presumably further reinforced by Ḥadīth, qarḍ (loan) is considered ribawī, i.e., only gratuitous monetary loans are considered permissible. Deposits (particularly, demand deposits) in Islamic banks are often structured as qarḍ ḥasan, or wadīʾah/amānah (trust). Based on the Qurʾān, Ḥadīth and earliest Islamic discourse, this article examines whether qarḍ is ribawī and whether the application of the concept of qarḍ ḥasan or wadīʾah/amānah is coherent in the context of Islamic finance.