A present economic obligation that is enforceable against an Islamic bank or financial institution. Enforcement entails settlement by means of economic resources (usually in the form of monetary assets) owned by the entity (in which case the liability is a financial liability). A liability may also arise from obligations to deliver goods or services to an entity’s customers under a certain type of contract (a non-monetary liability). Liabilities result from past transactions or past events.

In Islamic accounting, a present obligation is distinguished from a future commitment. A future obligation is not considered a liability unless it is an onerous commitment, i.e., it is expected to result in a loss to the institution when executed (either currently, or later at maturity, or any other stage). In this case, such loss is recognized in the present.