Tawarruq time deposit with wakalah principle: an option that triggers new issues

Purpose This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue. Design/methodology/approach This paper provides a review on the underlying contracts for deposit-taking activities. Findings There are two mains findings from this paper – first, the current deposit taking activities are characterized by principal guaranteed, it deems contrary to the nature of mudarabah. Second, we suggest the presence of wakalah in tawarruq term deposits and we argue that the application of the concept of bay al-wakillinafsihi would not affect the validity of wakalah. Originality/value This paper is considered to have its own originality in the sense that the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to the current deposit products.