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Understanding Usul AL-FIQH and Its Application Analysis for SUKUK.

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 148

Understanding Usul AL-FIQH and Its Application Analysis for

SUKUK

Remali Yusoff42
Nor’ Azurah Md. Kamdari43

ABSTRACT

Usul AL-FIQH, is the foundation of Islamic law or Shari’ah law. These Usul AL-FIQH provides modes
and sources for the jurists to seek for appropriate legal rules for any problem or issues. Therefore, the
objective of this paper only focus in the understanding Usul AL-FIQH and its application for the
contract of partnership or equity financing which are Sukuk Al-Musharakah and Sukuk Al-Mudharabah
related to Shari’ah law. The research of the understanding Usul AL-FIQH on the two types of contract
begins with the definition Usul AL-FIQH and its applications on contract conditions, similarities and
differences for both Sukuk. The paper based on secondary data which to understand Usul Al-FIQH on
the Sukuk Al-Musharakah and Sukuk Al-Mudharabah. An overview of the Usul AL-FIQH will be
discussed further in this paper.

Keywords: Usul AL-FIQH, Applications, Sukuk Al-Musharakah, Sukuk Al-Mudharabah.

______________________________
42
Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu, Sabah.
Email: remyuf@ums.edu.my
43
Faculty of Business Management, Universiti Teknologi Mara Kampus Rembau, Cawangan Negeri
Sembilan. Email: noraz013@uitm.edu.my
 149

1.0 INTRODUCTION

Usul AL-FIQH, is the foundation of Islamic law or Shari’ah law. These Usul AL-FIQH provides modes
and sources for the jurists to seek for appropriate legal rules for any problem or issues. It is important
to know what is the meaning of Usul AL-FIQH and legal rules (Ahkam) in Shari’ah in order to
understand the methods of identification of the rules as discussed in this field of studies. All jurists of
the schools of thought or jurisprudence agreed that Usul AL-FIQH is the most important branch of
Shari’ah since its help and guides the jurists to understand the revelations of the AL-Qur’an and
Sunnah (S.A.W) in order to identify and extract the legal rules. This knowledge is much needed and
important to the jurists in their course of finding the right solutions for current and futures issues and
problems.

1.1 Definition of Usul AL-FIQH

The term of Usul AL-FIQH can be classified into two following parts; i) Usul - which means sources,
original rule or foundation.; and ii) Al-FIQH - means connotes the knowledge of the legal rules,
pertaining to human conduct by referring to its sources. Legally, Usul AL-FIQH represents a body of
principles by which the mujtahid is able to derive the rules from the specific evidences. 1

a) Compulsory (Wajib)

It is refers to an absolute command that is derived from a decisive evidence of the sources. Any
disobedience to it without any valid excuse recognized through Shari’ah law is a Sin and any denial of
a command amounts to disbelief. Compulsory (wajib) can be categorized into a few sub-divisions. The
first sub-division is dividing wajib, according to its performance time, to omitting a wajib is tantamount
to haram, sale during the said time is regarded as haram too.2

b) Abominable (Makhruh)

It refers to an act whose omission is preferable and highly recommended. The textual provisions in
Shari’ah are usually forbid, in a non-obligatory nature or discourage such an act. Abominable or
Makhruh can be classified into to main parts, such as:-

i) Makhruh Tanzihi - undesirable but closer to permissible, and

ii) Makhruh Tahrimi - undesirable but closer to Haram.

The first refers to actions or deeds which are discourage in Shari’ah, like consuming certain bad odour
food or perfumes. While the second category, refers to an action that is forbidden whereby committing
it is sinful but denying its status does not amount to disbelief. This type includes an act of making an
offer to contract by overriding an existing offer of another. 3

c) Permissible (Halal)

Halal means an optional action or deed which neither obligatory nor blameworthy in Shari’ah. This
action may either be performed or omitted provided that it cannot be omitted totally. For instance,
contract of sale or consuming nutritional food are permissible, but totally abandon these actions may be
harm full or cause hardship to the person. 4

1.2 Sources of Islamic Law

The Islamic scholars have unanimously agreed that, when examining any new subject that has no rule
or legal value, the provisions of the primary bases of Islamic Law must be referred to. These are the Al-
Qur’an and Sunnah that includes the Prophet Muhammad (peace be upon him) words, deeds and tacit

1
Kamali, M. H., (2000). pp. 369-370.
2
Zaidan, A. Karim., (1992). P. 315.
3
Ibid., P. 316.
4
Ibid., P. 320.
 150

approvals. 5 In the case where there is no equivalent provided by these two non-arguable sources,
usually Islamic Scholars will subsequently resort to secondary sources of law, that’s the Ijma’ (general
scholar consensus), the Qiyas (reasoning by analogy), the Maslahah or Istislah (reasoning by public
interest), the Istihsan (preference), the Urf (customs or common practice) and Saad al-dhara’i
(blocking the means).
Therefore, when the jurist wants to know the status or legal rule of certain issues or problem, he/ she
must be refer to the primary sources first and according to the order of the sources. Unless he/ she
could not find the legal rule or the right solution to the issue concerned, he/ she may then refer to the
secondary sources.

a) Primary Sources

i) The Al-Qur’an

The Al-Qur’an literally meaning ‘the recitation’; and also romanized Qur’an or Koran is the central
religious text of Islam, which Muslims believe to be a revelation from Allah (God). It is widely
regarded as the finest piece of literature in the Arabic language. The Al-Qur’an is divided into chapters
(surah in Arabic), which are then divided into verses (ayah). Muslim believe the Al-Qur’an was
verbally revealed by Allah (God) to Prophet Muhammad (Peace be upon him) through the angel Jibril
(Gabriel) gradually over a period of approximately 23 years, beginning on 22 December 609 (Century),
when Prophet Muhammad (peace be upon him) was 40, and concluding in 632, the year of his Wafat
(death).
Muslim regard the Al-Qur’an as the most important miracle of Prophet Muhammad (peace be upon
him), a proof of his prophet-hood, and the culmination of a series of divine messages that started with
the messages revealed to Adam (a.s) and ended with Prophet Muhammad (peace be upon him). The
verses of the Al-Qur’an are are categorized into three fields: a) Science of the ‘speculative theology’; ii)
Ethical principles, and iii) Rules of human conduct. The third category is directly concerned with
Islamic legal matters which contains about five hundred verses or one thirteenth of it. The task of
interpreting the Al-Qur’an has led to various opinions and judgments. The interpretations of the verses
by Prophet Muhammad (peace be upon him) companions for Sunnis and Imams for Shias are
considered the most authentic, since they knew why, where, and on what occasion each verses was
revealed. Q

ii) Sunnah

The Sunnah is the next important source, and commonly defined as the traditions and customs of
Prophet Muhammad (peace be upon him) or the words, actions and silent assertions of him. It includes
the everyday sayings and utterances of Prophet Muhammad (peace be upon him), his acts, his tacit
consent, and acknowledgments of statements and activities. However, according Shi’ite jurists, the
Sunnah also includes the words, deeds, and acknowledgment of the twelve Imams and Fatimah,
Muhammad’s (peace be upon him) daughter who are believe to be infallible. Therefore, is the strength
of Sunnah as a evidence (dalil) in the formation of law or a ground of judgment.
As mentioned earlier, the Sunnah takes an important position next to the Al-Qur’an as one of the
main sources of Islamic Law. Since most of the Qura’nic legal provisions were revealed in general and
precise terms, the Sunnah becomes the second primary basis of Islamic Law for its role in
interpretation and specification of these provisions. In some cases, the Sunnah also provides new rules
besides Al-Qur’an but should be without overruling any of its general principles. We can say, the
Sunnah elaborates and illustrates the precise term of the Al-Qur’an and sometimes came with its own
rule where the Al-Qur’an is silent on that particular matter. However, if any contradiction between the
provisions of the two, both shall be harmonized whenever possible. Finally, the provision of the Al-
Qur’an shall prevail.6

iii) The Ijma’

Ijma’ is a form of dependent basis of Islamic Law after the Al-Qur’an and the Sunnah. Its
recognition is actually rooted in the primary sources of the hadith Prophet Muhammad (peace be upon

5
Yusoff & Wilson., (2004), p.127-129.
6
Al-Zarqa., (1998). Weeramantry., (1988). Kamali, M. H., (2000).
 151

him) as having said, “My people or nation shall never unanimously agree on an error.” By virtue of this
hadith, Ijma’ deserves to be a major resource in the determination of legal rules. 7 The term Ijma’ refers
to an agreement or consensus among Islamic scholars of certain issues in relation to legal rule. Such a
consensus is attained after due consideration of the two primary sources, which Al-Qur’an and Sunnah.
However, there will be no Ijma’ without a basis in the Al-Qur’an and the Sunnah.8 An example of a
valid Ijma’, the consensus of the Prophet companions on the allocation of the one sixth for the
grandfather from the estate of the deceased was based on one sixth proportion of a father since the
grandfather ma assume the father’s position in the absence of the latter.
In term of Ijma’ we can classified into two following parts;
i) Ijma’ Qauli (verbal consensus); and
ii) Ijma’ Sukuti (silent consensus).

The former, which is unanimously accepted by Islamic scholars, which is the express acceptance of all
the scholar involved in the Ijma’. Each of them expressly accepted the same opinion in any legal rule.
The latter is a consensus with no refusal but without express acceptance from every scholar. Thus,
some of the Islamic scholars do not consider such an Ijma’ to be a legally binding Ijma’.
The classical Islamic scholars unanimously accepted Ijma’ as a source and a method of legislation,
despite their different bases of Ijma’. The Hanafi and Maliki scholars confined their acceptance on
Ijma’ only to the consensus of the companions of the Prophet and of the scholars of Medina
respectively. However, the Hanafi scholars based their acceptance of Ijma’ on equity and would abide
by the Ijma’ of scholars of any time or age.

iv) Qiyas

Basically, there is no Ijma’ based on Qiyas. Qiyas is the process of deductive analogy in which the
teachings of the Hadith are compared and contrasted with those of the Al-Qur’an. In order to apply a
known injunction Nass to a new circumstance and create a new injunction. The ruling of the Sunnah
and the Al-Qur’an may be used as a means to solve or provide a response to a new problem that may
arise. However, this is only the case providing that the set precedent or paradigm and the new problem
that has come about will share operative causes or illah. The illah is the specific set of circumstances
that trigger a certain law into action. An example of the use of Qiyas in the case of the ban on selling or
buying goods after last call for Friday prayers until the end of the prayer stated in the Al-Qur’an (Verse;
62:9). By analogy this prohibition is extended to other transactions and activities such as agricultural
work and administration.
In their application, for example, there must be no Qiyas in cases that are contradictory to the
concept of reasoning, for, instance, the numbers of raka’at (prostratios) in prayers, where the human
mind cannot understand the reason for the rue. Despite that, the status of Qiyas as a source of law, a
Qiyas cannot be practised on a legal rule that is established by another Qiyas. It must be based on a
legal rule derived from the Al-Qur’an, the Sunnah and the Ijma’. In other words, a Qiyas is accepted as
a source of Islamic Law and a method of law making provided that the requirements are satisfied and
the established rule does not contradict with the main sources of law of the Al-Qur’an and Sunnah of
the Prophet Muhammad (peace be upon him).

b. Secondary Sources

The secondary sources of Islamic Law are list of methods for formation of rules for cases or subjects
which have no specific position provided in the Al-Qur’an and Sunnah. The sources of law must be
depending on this two main primary sources of Islamic Law, however, the companions of the Prophet
Muhammad (peace be upon him) and later the Islamic scholars developed a few methods for finding
the appropriate rules for any particular cases, such as;

i) Maslahah

Maslahah (public interest) is a concept in traditional Islamic Law. Maslahah is not Shar’ah, but it is a
concept belongs to Islamic jurisprudence or Fiqh. It is one of the secondary sources in Islamic
jurisprudence used by some School of Thought or Mazdhab to interpret Shari’ah in according to
general principles present in the Al-Qur’an and the Sunnah of the Prophet Muhammed (peace be upon

7
Al-Zuhaily., (1968).
8
Ibid., (1968).
 152

him) in order to set the rules. It is invoked to prohibit or allow something on the basis of whether it
serves the common good for the purpose of public interest.
The concept is related to that of Istislah. While the meaning of Maslahah is more towards ‘public
interest’, while the meaning of Istillah is to seek the best of ‘public interest’ towards Shari’ah object
and purpose. Maslahah was used in one sense by the Andalusian law practices or lawyer name al-
Shatibi (d. 1388), who focused on the motivations behind the Islamic law. Regarding questions related
to Allah (God) and ibadat, humans must look to the Al-Qur’an and the Sunnah for answer, however,
regarding to the relationship between humans, mu’amalat, humans should look for the best public
solution. Since society change, al-Shatibi thought that the mu’amalat part of the Islamic law also
needed to change.
Maslahah has also been used by several Muslim reformers in recent centuries. For example, Al-
Wahab (d. 1792) used Maslahah in a few cases. The concept is more known to Islamic modernist.
Among them is Muhammad Abduh is especially recognized for using the concept of Maslahah as the
basis for reconciling modern cultural values with the traditional moral code of Islamic law in the late
19th century.

ii) Istihsan

Istihsan is the method of legislation that usually overrules an opinion based on Qiyas. Literally,
Istihsan means to hold something for its righteousness, but in legal terms, Istihsan denotes the
deviation from ruling derived from Qiyas to another rule because is a stronger reason for such a
deviation. This is happening because of the deviation from a general rule (hukum kaulli) into a specific
exceptional rule (hukum istihnai’i). A rule based on Qiyas may be abandoned because stronger
evidence has been found in Sunnah or the Ijma’.
The departure from the rule or opinion based on Qiyas due to evidence found in the Sunnah or Ijma’
shows that the Sunnah and Ijma’ should prevail when they are contradict Qiyas. Therefore, in case of a
necessity where forbidden something to be made permissible to a certain extent, a rule sought through
Qiyas may be put.9 Furthermore, where a rule derived from Qiyas methodology conflicts with another
rule based on Qiyas, the priority must be given to the one that easier and more flexible rather than more
difficult and complex. 10 Although that the Qiyas that has been overruled may be a definite Qiyas
(Qiyas Jalli) than the other. Even though, might be a an indirect Qiyas (Qiyas Khaffi), the latter is to be
preferred if it increases the benefit and simplicity.
From the above discussion, the basis of legislation by Istihsan may either be a provision from the
Al-Qur’an or Sunnah, a rule or opinion sought Ijma’, Maslahah or Qiyas, a common practice or a
necessity.

iii) Istislah

Istilah (Arabic means “to deem proper”) is a method employed by Muslim jurists to solve problems
that find no clear answer in sacred religious texts. It is related to the term Maslahah, or “public
interest”. Extra textual pragmatic considerations are commonly accepted in Islamic jurisprudence
concerning areas where the Qur’an and the practices of the earliest Muslim generations provide no
specific guidance. However, appeals to istislah or maslahah are controversial when the goal is
reforming what has been considered to be divinely revealed law.
Istislah bears some similarities to the natural law tradition in the West, as exemplified by Thomas
Aquinas. However, whereas natural deems good that which is known self-evidently to be good,
according to as it tends towards the fulfillment of the person, istilah calls good whatever is connected
to one of five ‘basic goods”. Al-Ghazali abstracted these “basic goods” from the five legal precepts in
the Qur’an and Sunnah - religion, life, reason, lineage (or offspring) and property. In this classical
formulation, istislah differ from utilitarianism (the greatest happiness for the greatest number of people)
because something that results in “the greatest happiness” may infringe any one of the five basic values.

9
Al-Zarqa., (1968). p. 7.
10
Abu Zahrah., (1958). P. 14.
 153

A more liberal strain of istislah has been important in the 20th century and centres on the word of
Rashid Rida,11 who considered that the “no harm no retribution” hadith the supreme principle of legal
liberalism, trumping all other principles of Shari’ah. Rida made istislah “a central rather than
subsidiary principle for defining the law, which makes adaptions more flexible. By this method, some
human rights can be considered “Islamic”.

iv) Urf

Urf is an Arabic Islamic term referring to the custom, or ‘knowledge’, of a given society. To be
recognized in an Islamic society, urf must be compatible with the Shari’ah law. When applied, it can
lead to the deprecation or inoperability of a certain aspect of fiqh (Islamic jurisprudence). Although this
was not formally included in Islamic law, the Shari’ah recognizes customs that prevailed at the time of
Muhammad (p.b.u.h) but were not abrogated by the Qur’an or the tradition. Practices later innovated
are also justified, since Islamic tradition says what the people, in general, consider good is also
considered as such by Allah. According to some sources, urf holds as much authority as Ijma’
(consensus), and more than Qiyas (legal reasoning by analogy). Urf is the Islamic equivalent of
“common law”.
Urf was firt recognised by Abu Yusuff (d. 182/798), an ealy leader of the Hanafi School. But it was
considered part of the Sunnah, and not as formal source. Later al-Sarakhsi (d. 483/1090), opposed it,
holding that custom cannot prevail over a written text. 12 In the application of Urf, custom that is
accepted into law should be commonly prevalent in the region, not merely an isolated locality. If it is in
absolute apposition to Islamic texts, custom is disregarded. However, if it is in opposition to Qiyas,
custom is given preference. Jurists also tend to, with caution, give precedence to custom over doctoral
opinions of highly esteemed scholars.13
The application of Urf in legislation may sometimes abrogate the rules discovered through Qiyas
that were based on ambiguous provision, 14 especially when the issue concerns the public interest, as in
the public recognition of Bay-al-Istisna, the interest of the people should be given priority though the
contract is forbidden through Qiyas. Such a transaction is a void contract in Qiyas methodology as
there is no capital deposited at the execution of the contract as in the permitted Bay al-Salam. However,
as adapted by the Hanafi and Maliki schools, the rule obtained through Qiyas is ignored since it is
against the public need.15
To obtain recognition or to be adaptable in legislation under Islamic Law, a practice must fulfill the
requirement of a valid Urf. The practice firstly should followed continuously and be well known to the
people of a certain place or of a certain profession. 16 Secondly, such a practice should be applied from
antiquity and not a recent phenomenon. For example, in the interpretation of the Qur’anic term of ibnu
sabil, according to the usage during the revelation of the verse, such term refers to the one whose
journey is disrupted.
Most importantly, a practice needs to be in conformance with any divine provision or definite basis
or doctrine of Islamic Law so as to be recognized as a binding practice. Thus, if a practice contravenes
any of these provisions, it must not be accepted unless the provision is a general rule, when the practice
may be deemed a specific exception to the rule.17

1.3 Objectives of Shari’ah (Maqasid al-Shari’ah)

Objectives of Shari’ah, which are meant to enjoin benefits to individuals, community and to protect
them from evils and harms. All principles and rules in Shari’ah have been designed to achieve these
benefits and to ovoid the occurrence of harms. Therefore, some one in his/her studies of the principles
that the purpose of those principles may be to establish justice, eliminate harms, and encourage

11
Muhammad Rashid Rida, was an early Islamic reformer, whose idea would later influence 20th century Islamist
thinkers in developing a political philosophy of an “Islamic State”.
12
“Urf” Encyclopaedia of Islam.
13
Hasan, (2004), p. 169-171.
14
Al-Zarqa’, (1968), v.1, p. 135.
15
Abu-Zahrah, (1958), pp. 255-256.
16
Al-Zarqa’ (1968), V. 2, pp. 874-875.
17
Ibid., (1968), V. 2, pp. 876-878.
 154

cooperation and many more. The Shari’ah may take affirmative or punitive measures in order to
protect and promote these benefits. 18
The jurists have divided the benefits that become the aim of laws in Shari’ah into three main parts
as following:-

i) Daruriyyat (Absolute necessities)

ii) Hajiyyat (Expedient necessities)
iii) Tahsiniyyat (Accomplished interests)

These three categories have been classified according to their degree of important. Thus, if a benefit
that fall under daruriyyat category contradicts with benefit of hajiyyat category, the former shall
prevail. 19 In principles, the daruriyyat consists of five essential benefits of an individual, such as;
protection of faith, life, intellect, lineage and property. Generally, all Shari’ah principles aim at
preserving these essential benefits, hence jihad is compulsory for the protection of faith. Qiyas is
designed to protect individual’s life and seeking knowledge is an obligation on every Muslim for
enhancement of their intellectual. Among punitive measures that seek to protect lineage is punishment
for adultery and to protect individual’s property and therefore, punishment for theft. 20
The category of hajiyyat is also meant to protect the essential benefits but at secondary level. This is
due to mainly to remove hardship of any individual but it does not affect his survival. In Shari’ah, one
may find a few concessions and exceptions to the general rules, such as permissibly or shortening the
prayers and contract of Al-Salam (forward contract), which may be void under the general rule. This
category may, however, be elevated to daruriyyat if the benefits concern the public at large.21
A distinct category of maslahah or human needs that refers to things and activities that refine and
embellish people’s lives. Tahsiniyyat don’t primarily alleviate or relieve hardship and basic need, but
rather add elegance to life. Examples of tahsiniyyat elements include ornamentation s, recreational
activities, useful hobbies, decent enjoyments and others. Such elements must not involve any types of
unlawful luxuries, exaggerated lavishness and squandering. Shari’ah treats unlawful luxuries or
extravagances as prohibitions. Therefore, Islam gives precedence to satisfaction of necessities over
conveniences and embellishments.

2.0 APPLICATION OF USUL AL-FIQH TO SUKUK

From the above discussion and based on the Islamic financial concepts, sukuk issued by any authorities
could be based on different forms of contracts, like Al-Mudharabah and Al-Musharakah, where this
both contracts based on the equity financing or based on the profit and loss sharing method of financing.
On the other method of debt financing contracts like Al-Murabahah, Al-Ijarah, Al-Istisnah, Al-Salam,
and others alike. In this limited scope, we can take only the Al-Mudharabah sukuk into consideration
for analysis of its current practices. The Al-Musharakah sukuk are based on the Al-Musharakah
contracts, whereas the sukuk are issued by the mudarib or entrepreneur (provider of the capital) to
invest in agreed project, and the rabb al-maal (investors) with their sukuk, agree upon a shared profit to
be distributed at the time of maturity of the sukuk. As managers and management on that particular
project. The mudarib shoulders the responsibilities of the management of the project and share the
profit and the loss too. In this kind of contract, the profit and loss is not guaranteed, however it can be
expected through an appropriate and approximate figure. Therefore, the capital invested is not
guaranteed and the periodic returns are also depending on the profit or loss from the project. These
features are not meant for risk-averse mudarib (entrepreneur) and the rab al-maal (investors) also take
responsibility on its too. The contract of partnership owner is a type of Al-Musharakah sukuk where
both partners sharing the ownership of particular property. The joint venture can be done by act of
parties such as both parties buying the property for Al-Musharakah sukuk project or also automatic
transfer without the act of all parties, example processes of inheritance and others. 22
Sukuk-al-Musharakah is defined as a relationship that formed under a contract by the mutual
consent of the all parties for sharing of profits and losses in the joint project and business.23 All the
providers of capital are entitle to participate in management, but not necessary requires to do so. The

18
Kamali, M. H., (2000), pp. 379-380. Al-Zuhaily., (1998), pp. 1067-1068.
19
Kamali, M. H., (2000), p. 395. Al-Zuhaily., (1998), p. 1045.
20
Kamali, M. H., (2000), pp. 397-398. Zuhaily., (1997), pp. 1048-1049.
21
Kamali, M. H., (2000), pp. 398-399. Zuhaily., (1997), pp. 1050-1051.
22
Yusoff., (2004), p. 129.
23
Yusoff et al., (2016), P. 2.
 155

profits are distributed among the partners in pre-agreed ratios, while the loss is born by every partner
strictly in proportion to respective capital contributions.24
However, the sukuk providers have come up with the provision of credit enhancement to attract
investors and share the management of the project if his/her want too. Such credit enhancement
facilities include liquidity facility arrangement by the obligate, purchase undertaking at the fixed profit
formula. This will be provides security to guarantee income and the preservation of capital to the sukuk
investor. According to my understanding, in the Shari’ah perspective, it is a violation of the Al-
Musharakah principle to comply with such credit enhancement facilities as practiced by the market
based structure.25 The Shari’ah supervisory board of Accounting and Auditing Organization for Islamic
Financial Institutions (AAIOFI) have decreed that providing liquidity facility and purchase undertaking
at par value by the sukuk providers are not permissible in the Shari’ah. The Shari’ah board further
advised the Islamic Financial Institutions to invest more on profit and loss sharing in order to achieve
the maqasid-al-Shari’ah. Therefore, the Al-Musharakah sukuk is the right one for Muslim to invest
their money in any project with comply with the maqasid al-Shari’ah.

3.0 CONCLUSION

The Islamic banking system in Malaysia continues to face increasingly stiff challenges from the
conventional banking system. This is because the conventional banking system has developed more
competitive and innovative products for short-term and long-term financing facilities. On the other
hand, the Islamic banking system is still within the secondary stage of its development. In this
research, therefore the author will examine the Islamic banking system in Malaysia and will also
attempt to assess the developments which are confronting the Islamic financial system. This study has
founded that, it is evident from the above discussion that Usul-al-Fiqh is necessary in order to
understand the general concepts and principles of Shari’ah. This branch of knowledge emphasizes on
the methodologies in identification and derivation of legal rules, including the sources of the legal
rules, the legal maxims and the objectives of Shari’ah. The process of identification and derivation of
rules starts with the reference to the Qur’an and Sunnah. The jurist need to interpret and apply the
provisions of the Qur’an and Sunnah first before they could resort to the other sources. While they are
referring to the other sources, they must ensure that the identified legal rules must not contradict with
any provisions of the Qur’an and Sunnah or any other general principles of Shari’ah. Therefore, should
the jurist rely to any of the secondary sources or any of legal maxims, the reliance must be in
conformity with the general principles as well as the objective of Shari’ah.
To keep up in the run, with satisfactory services and products for the clients, the Islamic banks have
come forward to offer very similar, in many cases same though, products many of which are in serious
criticism from a Shari’ah perspective. On the term of Maqasid al-Shari’ah these products often do not
fulfill any or many of the Maqasids, hence itself creates prevents from upholding the Maqasid as
required to be. For example, with the intrusion of riba-based transaction in disguise, it creates a clear
barrier on the way to fulfillment of the objective of protecting ‘deen’, as well as ‘amal’. Similarly, in
many cases, the investments issued from the Islamic banks to establish companies and landmark
properties, are not appropriate from the stance of Maqasid al-Shari’ah, and hence are approved at the
cost of stakeholder’s losses.
Developing huge structures with funding from Islamic banks and IFIs does not comply with the
Maqasid al-Shari’ah, rather proper care for environment, for the stakeholders, considering socio-
economic developments should be incorporated as necessary elements in the consideration of such
decisions for funding. Shari’ah does not promote development for the cost of human lives, and
hardship in living. On the same run, Islamic banks should also encourage investments in natural power
plants and any environmental friendly investments. Shari’ah has also come up with solutions and
alternatives to those contracts. Home financing, car loans, and other loan contracts can be based
Musharakah Mutanaqisah (diminishing partnership) instead of the debated BBA contract. Similarly,
credit cards can be issued under the qardh ul-hasan or al-rahn contract.

24
Yusoff & Wilson., (2006), p. 34.
25
Remali et all., (2016), pp. 3-4.
 156

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