What is Al Wakala Bil Istithmar?
It is a written authorization that is given to “Wakil” to develop money and invest it for a fee.

Al Wakala Bil Istithmar “investment agency contract” is:

  • a written authorization that is usually given to a person or an institution which includes to invest his money on his behalf,  in exchange for a fee that is agreed upon, or without a fee, which is a Shari'a certified and has its controls, standards and pillars, and it has details related to the conditions and restrictions set by Islamic law.
  • It is permissible for the investment agency to be restricted to a particular kind of investment, or a specific place or be subject to other restrictions. It is also permissible that it be unrestricted, in which case it would still be restricted by customary practice and that the agent acts in the principal’s best interests.
  • Financial institutions and Islamic banks can be delegated to invest the funds, according to conditions agreed upon, and supervised by the Sharia Supervisory Board.
  • It is permissible for the institution to accept funds based on Wakalah from conventional banks and invest them in its activities which have been approved by its Shari’ah Supervisory Board, provided that the contract is free from conditions and restrictions that are prohibited by the Shari’ah
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