Muslimcreed – What is Hiwalah? For some people may still be unfamiliar with the term. The term hiwalah comes from the word tahawwul which means to move or tahwil means to transfer. In simple terms, hiwalah can be interpreted as a sharia transaction in the form of debt transfer.
Hiwalah is the process of transferring debts or receivables from the creditor to the guarantor for paying off the debt. Or move from muhil as the first borrower to muhal’alaih as the second borrower.
Definition and Examples of Hiwalah
As explained above, that hiwalah is a transfer of responsibility regarding accounts payable. For example, you have a debt of Rp. 100,000 to your friend, Khakim. Then, Khakim also has a debt to his colleague named Fadholi of Rp. 100 thousand.
Because the amount of the receivables is the same, Khakim then takes the initiative to transfer your receivables to Fadholi because he has the same receivables. In fiqh, this pattern of transfer of dependents is included in the Hiwalah article.
Hiwalah Scheme in Islamic Banking
Hiwalah schemes in Islamic banking are divided into two types, namely al-muqayyadah and al-mutlaqah. The explanation of the hiwalah scheme is as follows.
1. Hiwalah Al-Muqayyadah
Hiwalah Al-Muqayyadah is a hiwalah scheme that transfers the responsibility for paying the debt of the first party to the second party.
An example of this scheme is that individual A owes party B an amount of Rp. 2 million. Meanwhile, party B owes party C Rp. 2 million. Then party B transfers its right to claim its receivables on party C to individual A in exchange for payment of party B’s debt to A.
2. Hiwalah Al-Mutlaqah
The opposite of the previous example of hiwalah, Hiwalah Al-Mutlaqah is the concept of hiwalah with an unequivocal transfer of debt as a substitute for paying off the debt of the first party to the second party.
An example of hiwalah al mutlaqah is a conventional bank as a creditor to party B as a borrower. Then the debt of party B diverts the payment of debt to the muhal’alaih. So that the party B who pays the debt to the conventional bank is the muhal’alaih party without party B confirming the transfer of the debt.
Hiwalah law is sunnah.
Pillars of Hiwalah
The hiwalah pillars are the pillars that must be fulfilled before the hiwalah contract occurs. If one of them is not fulfilled, then the hiwalah contract cannot be carried out. The pillars in question include:
First, the pillars of hiwalah are muhil, that is, people who have debts. In this case, the muhil must be reasonable, mature, and have the ability to carry out the hiwalah contract. In addition, the owner of the debt or muhil runs it on his personal wish without coercion from other parties.
Muhal, namely the person giving the debt or the debtor. Just like the muhil requirements, the muhal party must reach the age of puberty, be of sound mind and carry out this contract voluntarily without coercion. Ijab qabul hiwalah said by the muhal must be in the contract assembly witnessed by related parties, and carried out consciously without coercion.
The third pillar of hiwalah is the muhal’alaih as the owner of the debt and is responsible for paying off the debt of the muhil. This party must have common sense, baligh, financial ability, and understand the implementation of the contract, as well as the pronunciation of qabul consent in the contract assembly in the presence of the relevant participants.
In the concept of hiwalah, debt is a form of loan made by the muhal from the muhal, and is declared to be repaid by the muhal’alaih. The debt may be in the form of money, assets, and other valuable objects.
In addition to the hiwalah pillars, there are hiwalah conditions that must be prepared in carrying out them. The conditions for hiwalah are as follows:
1. The indebted or muhil party is willing to carry out this contract
2. Debt products must be paid according to their rights, both type and amount of debt, repayment time, and quality. For example, in the form of debt in the form of gold, the repayment must be in the form of gold with an equivalent value
3. The muhal’alaih party must be responsible for bearing the debt after the mutual agreement of the muhil.
4. The muhal party or debtor must agree to the hiwalah contract
5. The debt remains in the guarantee of repayment