Amasya Theology Journal

Abstract

In recent years, the practice of traditional banks providing financing based on interest income or accepting deposits in exchange for paying interest has led individuals who wish to avoid interest-bearing transactions to seek alternative, interest-free financing methods. One such alternative is the savings-based financing system, commonly referred to as "collective pooling", which is particularly preferred by those aiming to acquire housing or vehicles. This system, which has long been implemented in Türkiye, is based on the principle that participants meet their financing needs through joint savings under a predetermined plan. The subject of a savings-based financing contract is limited to the acquisition of housing, workplaces, or vehicles, and involves two parties: the savings financing company and the customer who wishes to acquire these assets without interest. The key feature that distinguishes this system from other financing models is the requirement of a predetermined savings process prior to the utilization of financing. This condition not only ensures the sustainability of the system but also highlights the unique nature of the savings-based financing model in comparison to other financial methods. Savings-based financing agreements can be structured in two different ways: with a lottery (draw-based) or without a lottery (non-draw-based). In the draw-based system, contracts are arranged through the formation of participant groups, and a lottery is conducted under the supervision of a public notary. Participants who are selected through the lottery receive allocations in due time, and monthly installments are collected from them until the debt is fully repaid. While not obligatory, a down payment may also be required in this system. In the non-draw-based system, the allocation date is predetermined in the savings-based financing contract. Similar to the draw-based model, there is no mandatory requirement for an initial down payment; however, participants who make higher down payments may be entitled to earlier allocations. After the conditions stipulated in the relevant legislation and the contract are fulfilled, savings finance companies proceed with the allocation process. These companies bring together individuals seeking to acquire housing, commercial property, or vehicles through an interest-free model, organizing their savings and financing periods while monitoring their payments. In return for these services, participants are obliged to pay an organization fee. The organization fee charged by the company, as well as the contractual relationship between the company and the participant, have been subject to extensive discussion among Islamic legal scholars for a considerable time. In several studies conducted on this subject, the legal relationship between the parties has been described in various forms such as gratuitous grant with consideration (ivazlı hibe), loan (karz), diminishing partnership (şirketü’l-mütenâkısa), agency (vekâlet), and lease (kira). However, the lack of legal clarity regarding the structure of the contract prior to its regulation hindered a comprehensive assessment of the contract from an Islamic jurisprudential perspective. Recent legislative and regulatory reforms have introduced certain obligations and sanctions for companies operating in the sector, aiming to protect the rights of individuals seeking to participate in the system and to ensure the sector's growth in a more secure manner. These reforms have eliminated some of the previous uncertainties surrounding the system and have explicitly emphasized that it constitutes an interest-free financing method. The elimination of uncertainties through recent legal regulations has necessitated a renewed analysis of the contract from the perspective of Islamic law. In this context, the present study examines the savings-based financing system as a modern alternative institution that aims to organize individuals’ savings in an interest-free structure to meet their needs for housing, commercial property, or vehicles. The study explores the structure of the savings-based financing contract in light of current legal regulations and seeks to identify the type(s) of Islamic contracts upon which it may be based. The subject is addressed under two main headings in this study. In the first section, the savings-based financing system is introduced, and its two main methods—draw-based and non-draw-based—are explained. The second main section begins by summarizing contemporary evaluations and findings regarding the savings-based financing system from the perspective of Islamic law. It then attempts to clarify the nature of the relationship between the company, the participants, and the fund within this contract under Islamic legal principles.