Review of Islamic Law Against Execution of Collateral Auctions on Islamic Banking Institutions in Aceh, Indonesia

  • Muhammad Fadhli Universiti Sultan Zainal Abidin (UniSZA), Terengganu, Malaysia
  • Sadad Mahmud Universiti Sultan Zainal Abidin (UniSZA), Terengganu, Malaysia
  • Ahmad Azrin Adnan Universiti Sultan Zainal Abidin (UniSZA), Terengganu, Malaysia
  • Abd Jamal Universitas Syiah Kuala, Aceh, Indonesia
  • Ibraheem Alani AbdulKareem Universiti Sultan Zainal Abidin (UniSZA), Terengganu, Malaysia
Keywords: Islamic Law, Execution of Collateral, Auctions, Islamic Banking


This article review Islamic law quoted from jurists’ opinion and legal experts on the use of auction trading theory in the collateral sale. Every financial transaction in Islamic banking required a guarantee. It is intended to save bank funds if the customer defaults. Based on constitutional act Number 4 of 1996 of mortgage rights, Islamic banks have the right to confiscate the asset (guarantees) of a customer who has reached the due date without intention to pay. However, the bank cannot carry out unilateral execution to make direct sales. The formal procedures which banks must follow to disburse funds from customer guarantees are usually long and often meet various obstacles. This article analyzes normatively and empirically the bail auction guarantees implementation on Islamic banking in Aceh based on the Islamic law concept from the al Quran, Hadith, and the scholars’ Ijma’. Although conventional law is still used in the auction rules, the implementation of guarantees as applied to Islamic banking has adopted many Islamic laws. However, in the practice, there are still many problems that arise from the Islamic law scope which uphold the philosophy of maslahah and the concept of justice. The paper, therefore, employs qualitative approach and secondary date to investigate Shariah perspective against execution of collateral auctions on Islamic banking institutions in Aceh, Indonesia.


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How to Cite
Muhammad Fadhli, Mahmud, S., Adnan, A. A., Abd Jamal, & Ibraheem Alani AbdulKareem. (2021). Review of Islamic Law Against Execution of Collateral Auctions on Islamic Banking Institutions in Aceh, Indonesia. The Journal of Management Theory and Practice (JMTP), 2(1), 88-93.
Finance & Economics