Ta'widh

Ta'widh is compensation for an actual, provable loss caused by a debtor's delay, such as the cost of letters, calls and legal fees. Bank Negara's SAC permits it and allows the bank to recognise it as income, because it compensates real loss. AAOIFI takes the opposite view for anything beyond genuine recovery expenses: Shariah Standard No. 3 clause 2/1/2 forbids stipulating any financial compensation for delay, including compensation for lost income or currency depreciation, though clause 2/1/4 lets the creditor recover legal and other expenses actually incurred.