Shari’ah compliant financing has become a common part of the financial landscape. We often hear about the growth, accessibility, and development of Islamic finance in the fields of asset management, banking and insurance (takaful). The term Islamic finance, or shari’ah complaint finance is generally used to identify financial products that comply with the laws of Islam. While this is undoubtedly a useful distinction, it is imperative that we engage beyond the terminology. This can be considered in three main areas.

Shari’ah compliant, but not labelled as such

As Muslims we are required to conduct all our affairs in a shari’ah compliant manner. Islamic ethics encompasses more than the mere ritual as it defines how we interact with the mundane as well. In our everyday lives we conduct numerous financial transactions which aren’t clearly identified as “Islamic financial” or “shari’ah compliant” transactions. However, we as Muslims are still required to ensure that these transactions comply with the law of Islam, and ideally act in ways which are commendable. Some of these transactions include paying our employees or buying groceries. Within Islamic jurisprudence there are extensive rulings surrounding these types of transactions. Many books of Islamic jurisprudence will go into the minutiae of what can be sold, who can sell and the validity of a sale. Al Ghazzali has mentioned that for those who want to trade, it is obligatory to learn their means and conditions.

In addition to the everyday aspects of our lives, there are other components of finance that we engage in on an individual level that may also be part of Islamic finance yet may not be labelled as such. Individual partnerships, personal loans, inheritance, and forward sales are some examples. These still require that we conduct due diligence, and preferably act in ways which are commendable as it has the potential to be a source of punishment or reward for us.

Labelled as shari’ah compliant, but isn’t

Islamic finance has done remarkably well to provide easily accessible shari’ah compliant solutions for Muslims (and non-Muslims). It is possible to go from cradle to grave and only use shari’ah compliant products, such has been the growth of the industry. Like conventional finance, Islamic finance can potentially be profitable. Unfortunately, this has led to many charlatans who claim their products are “shari’ah complaint” but aren’t. It is therefore imperative that we educate ourselves and consult trusted and knowledgeable scholars in the field. It is in our best interest to weed out these bad apples in order that they don’t taint the immensely beneficial role that Islamic financial practitioners have played in making Islamic finance accessible to the public.

Practicing Islamic finance is an act of worship

Finance refers to anything money related. In a consumer centric capitalist society, profit maximisation is often a driving force behind transactions. While Islam doesn’t discourage profitable or beneficial financial transactions, we shouldn’t forget that the fundamental distinction between Islamic finance and conventional finance is that Islamic finance is Allah centric. Therefore, there may be aspects that we should imbibe into Islamic finance which may not be aligned with conventional finance. In fact, there may be components of Islamic finance that are discouraged or not seen as prominent drivers of financial decisions.

Prominent drivers of financial decisions in Islam include avoidance of waste, a strong sense of financial responsibility to others, care for the environment, being merciful and compassionate. The potential for a better world is immense. The Prophet ﷺ said: “He is not a believer whose stomach is filled while his neighbour goes hungry.” While it may seem simplistic, this is one belief that can eradicate poverty in the world. The Islamic tradition is replete with these types of narrations as well as examples of their personification.

Allah Knows Best