Need of security in Islamic Banking system to avoid NPA and its management
The main thing in Islamic Banking is that it is a banking without Riba. In no way the Riba is to enter in the process in any garb.
Where a person takes a loan he guarantees its return. The terms and conditions are to be mutually agreed. The guarantor is responsible for the amount guaranteed by him. The security can also be taken from which the amount taken on loan if not returned as agreed to may be taken and the rest if in excess be returned to the debtor.
Both parties are not to exploit each other and they should remain fair and just. Both sides have rights and must respect each other's rights.
You can find the answer in this article which I wrote few months back:
https://islamiceconomicsproject.wordpress.com/2014/09/10/risk-management-tools-in-islamic-banking/
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