Muqassah (set-off)
Extinguishing a debt owed to a party by a debt that party owes, either by operation of law or by agreement.
Muqassah is set-off: extinguishing a debt receivable by a debt payable between the same parties. AAOIFI's standard on settlement of debts by set-off divides it into mandatory set-off, which takes effect without both parties' agreement where its conditions are met, and contractual set-off, which the parties agree. Set-off is common in treasury and trade settlement, so systems that net obligations need to know which debts can lawfully be offset, in which currency, and whether netting would amount to exchanging debt for debt in a way the standards do not allow.
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This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.