DEBT TAKAFUL AS A RISK MITIGATION TOOL (A FEASIBLE TAKAFUL MODEL OF TRADING DEBTS FOR BUSINESS INDUSTRIES IN PAKISTAN)
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Date
2021-08-21
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UMT.Lahore
Abstract
Islamic finance is a need of time. People prefer Shariah-compliant solutions for their needs, such
as Islamic banking, so the government must improve its position in Islamic finance so that people
can find Shariah-compliant solutions to their problems. Takaful is a type of Islamic insurance.
Takaful is an Islamic way of doing insurance. After many Fatwas, that were issued by Shariah
Scholars and Fiqh academies in its favor it proved its viability. Many Takaful and Re-Takaful
firms, and Takaful windows under conventional insurance, operate around the world at the
moment. The significant growth in Takaful business around the world can be seen in the improved
financial performance of selected Takaful companies. Takaful is a mechanism which is acceptable
for Shariah. Some companies, such as "EULER HERMES" and "ZURICH," have recently begun
providing credit insurance in various countries. They are not offering Takaful model for Trading
Debts. Takaful is an alternate solution of conventional insurance. Insurance companies are
providing insurance for this sector, but peoples prefer Takaful policies instead of insurance. That’s
why a Takaful model for Business industries is needed so that an organization can cover its losses
using a mechanism that is aligned with Shariah rulings.
This research work will be regarded as a starting point for further enhancement of research about
Debt Takaful in Pakistan to complete the cycle of Islamic finance. It is a step towards creating
awareness among general public of the need and importance of Debt Takaful in present day
environment as well as a way to break the cycle of poverty and wide income differences. This
research provides alternate solution of credit insurance that is used by various companies in
European countries. This research discusses different views of Islamic scholar on conventional
insurance and Takaful models being practiced by different Takaful companies across the world.
This research also discusses some Shariah related issues faced by Takaful companies practicing
various Takaful models in different countries. In the light of recommendations of respondents, this
study concludes by proffering suggestions and proposes the best debt Takaful model.