Waqf Al-Gharimin Approach for Non- Performing Loans of Cooperative Banks with a Special Focus on Marawi Case

Abstract

The Battle of Marawi which continued from 23 May 2017 to 23 October 2017, took place in Marawi city, the capital of Lanao del Sur province in the Philippines. As an aftermath of the terror attack, the town was left in ruins with 95% of the structures within the four square kilometers of the main battle area heavily damaged or completely collapsed. 3,152 buildings were utterly destroyed, and 2,145 buildings were partially or heavily damaged due to the five-month heavy bombardment during the battle. Government estimates have placed the number of displaced residents at 200,000. These people are in urgent need of housing. However, it is almost impossible for them to get loans from commercial banks due to the credit risk. In this study, we are proposing a sustainable model which will assist the residents in rebuilding or renovating their houses with a unique model of financing, which adapts to a waqf and zakat system. This paper proposes a sustainable model which refers to the practices implemented in the history of the Muslim world, namely waqf model that existed during Ottoman times in the 18th century and onwards known as Waqf to Release the Indebted Prisoners to suggest an innovative solution based on waqf to cover a Non-Performing Loans. The study also investigates earlier text on debt from Al-Majalla Book IV: Transfer of Debt as well as existing fatawa on the implacability of the model without contradicting the rules of Shariah.