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Mahyuddin Khalid emkay@salam.uitm.edu.my

ISLAMIC BANKING AND COMPLIANCE TO THE SCHEME OF FINANCE SHARIAH LAWS

CONTENTS
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SOURCES OF SHARIAH LAWS PRINCIPLES GOVERNING OF ISLAMIC BANKING ETHICS IN ISLAMIC FINANCIAL SYSTEM

SOURCES OF SHARIAH LAWS

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Al-Quran Primary Al-Hadith Sources of Shariah Laws

Ijmak Maslahah Secondary Sadd Zariah

Urf Siyasas Syariyyah

AL-QURAN
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The fundamental and main sources of Islamic Law from which all other sources derive their authority al-Quran may be defined as:

The book containing the speech of Allah, revealed to Prophet Muhammad in Arabic and transmitted to us by continuous testimony, or tawatir.

Consists of the word of Allah SWT revealed on Prophet Muhammad saw in 23 years divine origin Address to all humanity, without distinction of race, region or time

THE SUNNAH
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Sunnah

Literally: a way or rule or manner of acting Technically: What has been (authentically) related to us on behalf of the Prophet { } from his sayings, actions, and tacit approvals. Literally: communication, story, conversation Technically: What was transmitted on the authority of the Prophet{} ,his deeds, sayings, and tacit approvals, or description of his sifaat (features). Both cover the same ground: practice, sayings and tacit approvals(taqrir)

Hadith

Quran generally deals with the broad principles or essential of religion. The details are supplied by Prophet saw through hadith

IJMA
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Ijma Consensus of opinion among the jurist on certain issues and ruling Literally:

Ijma is the verbal noun of the Arabic word Ajmaa which has two meanings:

To determine To agree upon something

Technically

Consensus of mujtahids (jurist) from the ummah oh Muhammad (saw), after his death in a determined period upon a rule of Islamic law

Consensus of opinion among the jurist of a particular period on a question of law Ijma maybe based on Quran, hadith or analogy

QIYAS
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Qiyas analogical deduction Literal

Measuring or estimating on thing in terms of another The extension of Shariah ruling from an original case (Asl) to a new case (far) because the new case has the same effective cause (Illah) as the original case.

Technical

Qiyas or analogy is resorted to in respect of problems about which there is no specific provision in the Quran or the Sunnah of the Prophet Analogical deduction of new issues on existing evidence from the Quran and Sunnah Process by which a rule of law is deduced from original text in views of common effective cause (illah)

SECONDARY SOURCES OF SHARIAH LAW

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Maslahah (consideration of public interest)

Making a judgment based on the principle of general benefits on matters that have no clear nas from the Quran or the Sunnah Islamic jurisprudence applies the maslahah in the implementation of a ruling As such, for anything that is beneficial & necessary to general public, it would establish dalil (indicative legal text) in form of directives

Sadd Zariah (blocking of means)

Refers to the approach used to curtail anything that can cause a Muslim to do the forbidden Considered as an early preventive measure to prevent Muslim from doing what is forbidden by Allah s.w.t

Urf (custom)
Refers to the norms of majority of a society whether applied in speech or deed Considered as adat jama iyyah (customs that are collectively acceptable) and can be used as a legal basis so long as it does not contradict the Syara

Siyasah Syariyyah
Refers to the area in Islamic jurisprudence that explains rulings related to the policies and approaches taken in organizing the national administrative structure (and its people) in accordance with the spirit of Shariah Cover the issues of central and regional administration, economy, judiciary, peace, international relations etc.

PRINCIPLES GOVERNING OF ISLAMIC BANKING

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ISLAM

AQIDAH (Faith & belief)

SHARIAH (Practices & activities)

AKHLAQ (Moralities & ethics)

IBADAT (Man to God worship)

MUAMALAT (Man to Man activities)

POLITICAL ACTIVITIES

ECONOMIC ACTIVITIES

SOCIAL ACTIVITIES

FINANCIAL ACTIVITIES

AQIDAH (FAITH & BELIEF)

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Firm belief in the heart and must be applied into actions The belief in God, the belief in Prophets, The Angels, The Books, The Hereafter and The Divine Decree

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SHARIAH (PRACTICES & ACTIVITIES)

The original meaning of word shariah is the path or the road leading to the water. In legal term sharaa means to make or establish laws. In legal term means laws relating to all aspects of human life established by Allah SWT for his servants. Laws relating to human life are divided into three:

Those relating to belief Those relating to deeds Those relating to ethics

It is the responsible of the Muslim to knows the rules of Allah such as rules related with:

Man relationship with God like worship (ibadah) Man relationship with other fellow-human like rules of marriage (Munakahat), criminal law(jinayah), business (Muamalat), politics (Siyasah), international law and others.

OBJECTIVES OF SHARIAH
12 Main objectiv e

To construct human life on the basis of marufat (virtues) and to cleanse it of the munkarat (vices).

Objectives of Islamic Law are the protection of

These objectives are of 3 levels that are

Faith

Life

Intellect

Posterity

Property

Dharuriyyat (life and death)

Hajiyyat (removing hardship)

Tahsiniyyat (beautifying)

AKHLAQ (MORALITIES & ETHICS)

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Covers all aspects of Muslim behavior , attitudes and work ethics with which he perform his practical action:
Moralities
Behavior Thinking

and ethics

The

process of judgement

IBADAH (WORSHIP)
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Ibadah (worship) is actually the main purpose of the creation of man on earth. Allah mentions in the Holy Quran :
I

created the jinn and humankind only that they might worship me (51:56)

To serve Allah is not only through the devotional acts of prayer, fasting, payment of zakat and pilgrimage. The Muslim serve Him through all their good actions whether for worldly life or heavenly purposes.

IBADAH (WORSHIP)
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Definition of ibadah

Total submission and obedient physically and mentally based on a belief that the one whom is worshipped almighty honor and power that will induce the feeling of degradation and affection. Covered all human activities physically and spiritually Covered all worldly and Hereafter affairs Main condition - sincere oneself in performing Specific: -In time, place, conditionally, directionally and with specific actions -prayer -fasting -pay the tithe/zakat -perform the pilgrimage General : -individual, society, leadership, the whole life

Concept of ibadah

The grouping of ibadah

MUAMALAT
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Muamalah is from the verb aamala literally meaning to interact. Muamalat means interactions or transaction. Commercial transactions

Through contracts which are permitted by the Shariah as evidenced by the Quran, the Sunnah and other sources of Islamic law.
Free from riba Comply with (objectives of) shariah Devoid of gharar (uncertainty, indeterminacy) Free from qimar (gambling) Free from maysir (games of chance) Free from ghishsh (fraud) Free from khibalah (cheating) Entitlement to profit depends on liability for risk Contracts based on free mutual consent

Characteristics of muamalah

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ETHICS IN ISLAMIC FINANCIAL SYSTEM

Tawhid (Unity)

Ihsan (Benevolence)

Adl (Equilibrium)

ETHICS IN ISLAMIC FINANCIAL SYSTEM

Responsibility

Huriyyah (Free will)

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