Daman al-khusran

Definition of "Daman al-khusran"

Lit: Surety for loss. Tech: Standing surety for some- one’s loss in a business. An application has been made of this principle in the case of riba-free banking. The state can hold out a guarantee to the depositors of a riba-free bank to make good any loss in the deposits through mudarabah or musharakah with the bank.