The Principle of Tadarruj in Islamic Finance: A Conceptual Review

Abstract

Even though Islamic finance industry has been recognized among the promising sectors in the world, it is claimed that the modern financial environment is not too conducive to its progress. In fact, Islamic financial institutions have experienced various challenges, risks and restrictions in their operation. To adapt Shari’ah rulings into modern financial system, this effort must be carried out gradually. In this regard, this paper aims to explore the principle of tadarruj (gradual) and its application within Islamic finance. Since this is a conceptual research, it is based on document analysis. It is found that the element of tadarruj can be learned from the prohibition of riba at the time of revelation. In modern time, it seems that this principle has been considered in Islamic banking development in Malaysia, one of among progressive countries in this industry. Since this paper provides a philosophical perspective over the concept of tadarruj, it may be useful for all Islamic finance players including regulators, practitioners, and scholars, particularly to introduce new policies, to develop products and to expand the operation of Islamic finance industry.