Justice in Joint Liability Burden Sharing for Compliant Borrowers: An Islamic Economic Law Analysis of Microfinance Practices

Abstract

Joint-liability group finance can sustain collective installment payments while transferring another borrower’s arrears to members who have already repaid their own obligations. This study examines how such costs were allocated to disciplined borrowers at PT Amartha Mikro Fintek in Tanjung Senang, Bandar Lampung, and interprets the practice through Islamic economic law. The research used a descriptive-analytical qualitative field approach involving interviews with one Business Manager and six disciplined borrowers from three groups comprising 63 members, supported by observation, financing documentation, and legal literature. All six borrower informants reported contributing personal funds toward others’ missed installments. Their contributions varied across episodes and were shared equally among the members covering a particular shortfall. Borrowers described redirecting money from household needs or business inventory and experiencing additional social demands. The reviewed Special Terms of Funding Agreement did not itself specify group liability, although informants described receiving an initial oral explanation. Read through distributive justice, informed consent, al-‘adl, ta‘āwun, al-ḍarar yuzāl, and ḥifẓ al-māl, the evidence raises questions about proportional burden allocation and the recovery of advances without establishing that joint liability is inherently unlawful. The study argues for clearer disclosure, reasonable limits, consideration of default circumstances, and transparent reimbursement procedures. Its conclusions are limited to the experiences documented in this qualitative case