Deposits and Pledges

A Zakat-able asset (e.g. gold coins) which is pledged to a creditor as security for a loan is not subject to Zakat because the owner (pledgor) is deprived of possession and therefore cannot dispose of the asset for the duration of the pledge for his own benefit. Similarly, a deposit paid by a tenant under a lease to a landlord as security for the fulfillment of the tenant’s obligations is not subject to Zakat. The same principles would apply to other forms of deposits, e.g. electricity.

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