Regulatory Alerts2026-01-01
Fatwa of the Supreme Council for Sharia Supervision Regarding the Tawarruq Cap
The Supreme Council for Sharia Supervision has issued a fatwa permitting individuals to utilize Tawarruq financing with a delayed payment limit not exceeding 1% of their income, provided the arrangement aligns with Sharia principles and addresses current domestic economic crises. The ruling allows banks to compensate individuals for early settlement or extended payment periods up to five years, while maintaining mutual agreement and adhering to the jurisprudential principle that necessity overrides prohibition. By validating Tawarruq as a permissible commercial transaction distinct from conventional interest-based financing, the Council ensures citizens can access essential credit without excessive fees or compulsion during financial downturns.