Gharamah
غرامة
Pronunciation: ghah-RAH-mah
A penalty for late payment that the creditor may not keep; it must be given to charity.
Definition
A penalty imposed on a debtor who delays payment without excuse, designed to deter default. Because a creditor profiting from delay would be riba, the penalty cannot be kept by the creditor and must be paid to charity; the creditor may recover only actual costs separately (ta'widh).
AAOIFI permits a charity-directed penalty clause in Murabaha and similar contracts provided the customer is not in genuine hardship. The amount should be fixed or capped rather than compounding, and the charity destination should be disclosed.
Related Terms
Ta'widhتعويض
Compensation for actual loss caused by late payment, which the creditor may keep.
Ribaربا
Interest or usury - the most strictly prohibited practice in Islamic finance.
Murabahaمرابحة
A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup.
Sadaqahصدقة
Voluntary charitable giving - distinct from obligatory zakat.
Daynدين
Debt: a fixed obligation owed by one party to another, which Islamic law protects but forbids trading for profit.
Arbunعربون
A non-refundable down payment or earnest money to secure a purchase.
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Gharamah (غرامة) - A penalty for late payment that the creditor may not keep; it must be given to charity. A penalty imposed on a debtor who delays payment without excuse, designed to deter default. Because a creditor profiting from delay would be riba, the penalty cannot be kept by the creditor and must be paid to charity; the creditor may recover only actual costs separately (ta'widh).
- A penalty for late payment that the creditor may not keep; it must be given to charity.
- Category: Contracts
- Related: Ta'widh, Riba, Murabaha, Sadaqah, Dayn, Arbun
- Compare related Shariah-compliant products on HalalWallet
Source: HalalWallet (halalwallet.ca)
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This page is reviewed against HalalWallet editorial standards and source documentation.
Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-10-01
Editorial Team, HalalWallet
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