ISLAMIC FINANCIAL PRODUCT DEVELOPMENT: SHARIAH ANALYSIS (Aspects of…
ISLAMIC FINANCIAL PRODUCT DEVELOPMENT: SHARIAH ANALYSIS
The application of Syariah Concepts
Bai' Bitahaman Ajil 36.3%
Islamic Banking System
Bai' Bithaman Ajil 40.7%
Musyarakah & Mudharabah 0.3%
Islamic Bond and Islamic Banking System
Mixed or hybirid bonds
Aspects of Islamic Financial Product Development
Shariah (Islamic Law)
Main Syariah in Islamic Financial Production Development
1)Heavy Reliance of the Fixed Return
Islamic financing products were perceived to be necessarily fixed-return mode of financing even though the actual fact is otherwise.
The excessive utilization of the fixed return modes has characterized the Islamic financial institutions as inflexible and inadaptable to volatile cost of funds.
2)The Underullitization on Islamic Banking
Heavy reliance on the fixed-mode of Islamic concepts has led to utilization of Islamic partnership contracts.
In general, partnership in Islamic jurisprudence (
) is of two types:
A holding partnership refers to the joint ownership by two or more persons of an asset by 'optional' or 'compulsory' means of inheritance or wills or joint purchase or other circumstances.
A contract partnership refers to a 'joint commercial enterprise' or mutual agreement by two or more persons to contribute to the capital of the partnership and share in its profit or loss.
Partnership projects for commercial purposes basically can be further divided into two major categories:
3)The practice of Legal Device
bay al-'inah -(which is consedered as circumvention of riba')
reconsider the use of legal device or the option of controversial juristicsopinions.
has worsened the perception of the public towards the islamic banking. and finance industry.
all of these had depreciated the vaule
fiqh muamalat discipline is the availbility of several opinions of Islamic jurist pertaining to an issue.
however the real world practice it.
Salient Features of Fiqh Muamalat: The Basis for Islamic Financial Product Development
The primary ruling is permissibility except where the Shariah prohibition states.
Fatwa or verdict in based on the easiest/most appropriate (al-aysar) opinion.
Legal rulings are based on rational reasoning (illah aqliyyah).
Specific Quranic and Sunnah resources are few and general in nature.
The primary ruling is impermissibility except where the Shariah permission states
Fatwa or verdict is based on on the most cautious (al-ahwath) opinion.
Legal rulings cannot be based on rational reasoning (it is a submissive action).
Specific Quranic and Sunnah resources are many and detailed in nature.