Abstract:

This conceptual paper primarily explores the current applications of credit guarantee (CG) in selected government institutions. Two CG government programs have been selected. The theoretical discussions have covered the underpinnings concepts, mainly kafalah contract and cash waqf. To this effect, the shariah stand on charging fees for kafalah has been highlighted along with the latest resolutions and decisions of shariah academies and institutions are cited. The discussions of the paper resulted in a conceptual CG framework based on cash waqf. The qualitative method is used, and an extensive desk review of the existing literature has been conducted. This paper found that the Malaysian CG program has a special Islamic scheme to offer CG, nonetheless the program uses the concept of Kafalah bil-ujrah where it charges fees directly from the client with various rates. This paper argues that cash waqf perfectly fits as a source of funding for providing CG.

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