Wa'd (promise)
A unilateral promise to do something in the future; it can be made binding and is used in hedging, sukuk and lease-to-own deals.
Wa'd is a unilateral promise, an expression of commitment by one party to perform certain actions in the future, as Bank Negara Malaysia's glossary defines it. Many standard setters accept that a wa'd can be binding on the promisor, which allows it to support purchase undertakings in sukuk, lease-to-own arrangements and Islamic hedging. A bilateral exchange of binding promises for the same deal, muwaadah, is treated more restrictively.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Muwaadah (mutual promise)An exchange of promises between two parties for the same future transaction, treated more restrictively than a unilateral wa'd.Purchase undertakingA unilateral promise by the originator or obligor to buy the sukuk assets from the holders at maturity or on default.Islamic FX forwardA currency hedge built on a binding promise to exchange at an agreed rate on a future date, with the exchange itself done at spot.Tahawwut (hedging)Hedging; in Islamic finance, risk management transactions built from permissible contracts rather than conventional derivatives.