BANKING AFFAIRS

Detailed explanation-1: -Wakalah literally means protection, delegation, or authorization. Legally, wakalah refers to a contract in which a person who has complete legal capacity authorizes another to conclude a certain well-defined permissible contract on behalf of that person.

Detailed explanation-2: -A more recent innovation to Islamic finance and bond structures, a wakala is an arrangement whereby the principal appoints an agent (wakeel) to carry out a specific task on its behalf.

Detailed explanation-3: -Particular Agency (al-Wakalah al-Khaassah ) For example, a principal may appoint an agent to sell his car or to purchase a house for him. In this case, the agent is authorised to sell or buy only that particular house or car.

Detailed explanation-4: -The term wakalah in Arabic means agency. Therefore under the structure, an agency relationship is agreed between two parties to conduct a certain business undertaking.

Detailed explanation-5: -Wakala in Islamic banking is used, where a representative is appointed to undertake transactions on another person’s behalf. The agency law or Wakala law is to facilitate economic exchanges, where they are hindered by distance, size, and numbers, or where the principal is unable, or unwilling to act personally.