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Same goes to the function of Baitul Mal. Baitul Mal can be translated as "House of money" or "House of Wealth." It was a financial institution responsible for the administration of taxes in Islamic states, particularly in the early Islamic Caliphate. It served as a royal treasury for the caliphs and sultans, managing personal finances and government expenditures. Further, it administered distributions of zakah revenues for public works.
In the time of Khalifah Umar r.a., with the extension in conquests money came in larger quantities. Khalifah Umar r.a. also allowed salaries to men fighting in the army. Abu Huraira r.a., who was the Governor of Bahrain, sent a revenue of five hundred thousand dirhams.
Khalifah Umar r.a. summoned a meeting of his Consultative Assembly and sought the opinion of the Companions about the disposal of the money. Khalifah Uthman ibn Affan r.a. advised that the amount should be kept for future needs. Walid bin Hisham suggested that like the Byzantines, separate departments of Treasury and Accounts should be set up.
After consulting the Companions, Khalifah Umar r.a. decided to establish the Central Treasury in Madinah. Abdullah bin Arqam was appointed as the Treasury Officer. He was assisted by Abdur Rahman bin Awf and Muiqib.
A separate Accounts Department was also set up and it was required to maintain record of all that was spent.
Later, provincial treasuries were set up in the provinces. After meeting the local expenditure, the provincial treasuries were required to remit the surplus amount to the central treasury in Madinah.
Today, we can still see Baitul Mal being practised in some of the Islamic countries but what differ is their style of administration. Nevertheless, the aim of Baitul Mal remained the same, to manage money justly.