Wakalah
Agency: one party appoints another to act on its behalf, with or without a fee.
Wakalah is a contract of agency in which a principal, the muwakkil, authorises an agent, the wakil, to carry out a task that may be delegated, with or without a fee. Bank Negara Malaysia's policy document describes its nature as the delegation of powers from principal to agent. Islamic banks use wakalah widely: to appoint customers as agents to buy assets, to manage investment accounts for a fee, and to run takaful funds.
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
Wakalah bil-istithmar (investment agency)Investment agency: the agent invests the principal's funds for a fee, and the profit or loss belongs to the principal.Wakalah model (takaful)The takaful model in which participants appoint the operator as agent to run underwriting and investment for a known fee.Ujrah (fee)A fee, wage or rent paid for a service, an agency or the use of an asset; the price side of ijarah and paid wakalah.Interbank investment wakalahAn interbank placement in which one bank invests another's funds as agent for a fee, targeting an expected but not guaranteed profit.