Compensation agreed upon by the contracting parties as a payment that can be claimed by the creditor when the debtor defaults in the payment of his debt. Shariah Advisory Council of Bank Negara Malaysia decided that the ta'widh may be imposed on the defaulting debtor who fails to meet his obligation to pay the financing based on the following conditions:
i. The amount of ta'widh cannot exceed the actual loss suffered by the financier;
ii. The determination of compensation is made by a third party, which is Bank Negara Malaysia; and
iii. The default or delay of payment is due to negligence on the part of the debtor.