Issuing Credit cards on the basis of Musharaka and Qard Hasan and its effects on the earnings of the card holders

Abstract

The objective of this paper is to introduce Musharaka-Qard Hasan based credit card where both the issuer (Islamic Banks) and the card holders will share income from the credit card business and the issuer, or the Islamic bank will always offer Qard Hasan financing for the credit limit as well as on outstanding balance as part of the contribution to credit card business while card holder will make all the transactions and payments. The current study is based on theoretical mathematical and multiple regression model where partial derivatives are used to examine the effects of each of the independent variable. The findings suggest that the Musharaka-Qard Hasan based credit card will eliminate doubtful (Shubuhat) modes of financing currently embedded in most of the credit cards issued by various Islamic Banks. This is the first-time credit card based on Musharaka and Qard Hasan will generate income not only for the Islamic Banks but also for the card holders and this will guarantee the shared prosperity promised by Islamic finance. To the best of our knowledge, this is the first time Musharaka-Qard Hasan based credit card is to be introduced as a new and unique credit card in the history of Islamic finance. In this unique credit card, both the card holders and card Issuer will reap the benefits and will work as partners. It is expected that this new Musharaka-Qard Hasan based credit card will sweep away all other exploitative credit cards in the world and thus the market share of the Islamic banks is expected to grow without bounds in the global marketplace.