Principles Governing Credit Rating in Islamic Credit Risk Management from the Perspective of the Quran

Credit risk in banking is a loss resulted from the borrower's delay or default in fulfilling his obligations in maturity. Credit risk is one of the most important risks of banking and inadequate attention to loan applicant's credit validation is one of the major factors of it. This means that the loans are granted to those who are not qualified and so they refuse to repay them either intentionally or unintentionally. In this study we have selected some verses from the Holy Quran which describe the role, importance, conditions of acquisition, and personal characteristics of a person who wants to take an asset. The research method is descriptive-analytical and has tried to extract critical components from the Quran for the assessment of credit risk by adopting a thematic interpretation approach and by referring to the related interpretations.
The main research question is the principles that the Quran dictates for removing the credit risk and for assessing the borrower’s characteristics when he applies for a loan. To respond to these questions, our hypothesis is that in terms of the Holy Quran, seven principles are determinative in Islamic banking behaviors, namely the necessity of social justice, the recognition of humans as divine caliph, the necessity of fulfilling one's promise, the necessity of rule of Islamic ethics in Islamic financial market, consistency of the property, necessity of proper use of the property and not handing it in to the feeble-minded people, and finally the principle of not inflicting damage on trade and financial deals. The results of the study confirmed the hypotheses.