Wadiah

Introduction

Wadiah is a contract (akad) between the owner of goods and custodian of the goods. To protect the goods from being stolen, destroyed etc. In other word the custodian is to ensure the safe custody of the goods.

The two types of Wadiah are Wadiah Yad Amanah (safe custody - trust) and Wadiah Yad Dhamanah (guaranteed custody).

If the funds are pooled together, being utilized and being charged for the service, the Shariah contract of Wadiah Yad Dhamanah is applied.

Essential elements of Wadiah

The essential elements of Wadiah are:

1. The goods
2. Owner of goods
3. Custodian of goods
4. Contract – Offer and Acceptance

Bank is not allowed to promise and the customer is not allowed to request for any return when accepting or depositing the funds. Any promise or request is equivalent to ‘riba’ which is strictly prohibited in Islam. However, the bank at its sole discretion may award the customer with a certain amount of returns as a token of appreciation for depositing with the bank.