The Element of Sad Zara’i in Islamic Banking: A Study on Shariah Governance Approach in Malaysia
Keywords:
Sad zara’i, Islamic banking, Islamic finance in MalaysiaAbstract
This paper analyzes the element of sad zara’i through the regulatory approach for Islamic banking operations in Malaysia. Since its first institution began in 1983, the Islamic banking sector has witnessed a dramatic progress. Today, Islamic institutions can compete with their conventional counterpart. Nevertheless, this sector has experienced various challenges in maintaining its viability in the conventional finance environment. As a result, several aspects of Shariah need to be reconsidered, making Islamic finance look similar to the conventional finance. This includes imposing late payment charges, replicating conventional products to be Islamic, and implementing floating rates. While Islamic banking practices may be lenient in satisfying market needs, the regulator has taken several approaches to uphold Shariah principles in this sector. Some of those approaches seem to be embedded with sad zara’i, one of the popular sources of rulings in Islam, which applied to ban any means leads to haram. Thus, this study aims to analyze how sad zara’i is embraced in several policies by the regulator to ensure Shariah compliance within Islamic banking operations in Malaysia. Through library research, it is discovered that the element of sad zara’i can be manifested in several approaches: presenting urf fasid, tightening so-called controversial practices, and providing guidelines on sensitive Shariah matters. While the data of this study may be limited since it relies on secondary data, practical issues on Islamic banking in Malaysia are discussed. Therefore, it is hoped that its findings can provide insight into how sad zara’i is applied in a new manifestation, especially in dealing with contemporary issues like Islamic banking.
Downloads
References
AAOIFI. (2010). Sharia Standards for Islamic Financial Institutions. Manama: AAOIFI
Ab. Ghani, H., Lambak, S., Abdullah, Md. F., & Sulong, Z. (2019). Is Hajiyat Still the Basis for Takaful Operators to Resort to Conventional Re-insurance? An Appraisal on Malaysian Takaful Industry. In N. Z. M. Sidek, R. Said, & W. N. W. Hasan (Eds.), Islamic Development Management: Recent Advancements and Issues (pp. 207–213). Springer. https://doi.org/10.1007/978-981-13-7584-2_16
Abu Zahrah, M. (1958). Uṣul al-Fiqh. Beirut: Dar al-Fikr al-ʿArabi.
Ahmed, H., & Aleshaikh, N. M. (2014). Debate on Tawarruq: Historical Discourse and Current Rulings. Arab Law Quarterly, 28(3), 278–294. https://doi.org/10.1163/15730255-12341282
Al-Ashur, M. (2001). Maqaṣid al Shariʿah al-Islamiyyah (M. Al-Misaw, Ed.). Amman: Dar al-Nafais.
Al-ʿAsqalani, A. (2000). Fath al-Bari Sharh Ṣahih al-Bukhari (A. al-‘Aziz Bin Baz, Ed.). Beirut: Maktabah Dar al-Salam.
Al-Burhani, M. (1985). Sad al-Dharaʿi fi al-Shariʿah al-Islamiyyah. Beirut: Dar al-Fikr.
Al-Duraini, F. (2008). Buhus al-Muqaranah fi al-Fiqh al-Islami wa Usulihi. Damascus: Mu’assasah al-Risalah Nashirun.
Al-Duraini, F. (2013). Manahij al-Uṣuliyyah. Damascus: Muassasah al-Risalah al-Nashirun.
Al-Duri, Q. (2011). Al-Iḥtikar wa Atharu fi al-Fiqh al-Islami. Amman: Book publisher.
Al-Kailani, A. (2008). Al-Taṭbiq al-Maqaṣidi li al-Ahkam al-Sharʿiyyah. Al-Majallah al-Urduniyyah Fi al-Dirasah al-Islamiyyah, 3(4).
Al-Khadimi, N. (2010). Al-Ijtihad al-Maqaṣidi. Beirut: Dar Ibn Hazm.
Alkhan, A. M., & Hassan, M. K. (2019). Tawarruq: Controversial or acceptable? Arab Law Quarterly, 33(4), 307–333. https://doi.org/10.1163/15730255-12334042
Al-Nawawi, Y. (1997). Al-Minhaj Sharh Ṣohih Muslim (K. Shaikhon, Ed.). Damascus: Dar al-Maʿrifah.
Al-Qaḥṭan, M. (2006). Mabahis fi ʿUlum al-Quran. Beirut: Muassasah al-Risalah al-Nashirun.
Al-Qaradaghi, A. (2015). The Principle of Sad Zara’i and Its Applications in Contemporary Financial and Banking Transactions. The Sixth Shura Fiqh Conference, Kuwait.
Al-Qarafi, S. (2003). Anwar al-Buruq fi Anwa’ Al-Furuq. Beirut: Muassasah al-Risalah Nashirun.
Al-Qarḍawi, Y. (1980). Al-Halal wa al-Haram fi al-Islam. Cairo: Al-Maktabah al-Islami.
Al-Qarḍawi, Y. (2005). Al-Siyasah al-Sharʿiyyah fi ḍau’ Nuṣuṣ al-Shariʿah wa Maqaṣidiha. Cairo: Maktabah Wahbah.
Al-Sanusi, A. (2003). ʿItibar al-Ma’alat wa Muraʿah nataij al-Taṣarufat. Beirut: Dar Ibn Al-Jauzi.
Al-Shatibi, I. (2004). Al-Muwafaqat fi Usul al-Shari’ah (ʿAbdullah Al-Darraz, Ed.). Beirut: Dar al-Kutub al-ʿIlmiyah.
Al-Zaidan, A. (1968). Al-Madkhal li al-Dirasat al-Shari’ah al-Islamiyyah. Dar ʿUmar al-Khaṭab.
Al-Zaidan, A. (1986). Al-Wajiz fi Uṣul al-Fiqh. Muassasah Quzṭubah.
Al-Zuhaili, M. (2010). Al-Tadarruj fi al-Tashriʿ wa al-Taṭbiq fi al-Shariʿah al-Islamiyah. Al-Majlis al-Wusṭo wa al-Shuun wa al-Adab al-Kuwait.
Al-Zuhaili, W. (1986). Usul al-fiqh al-Islami. Damascus: Dar al-Fikr.
Al-Zuhaili, W. (2006). Fiqh al-Islami wa Adillatuhu. Damascus: Dar al-Fikr.
Amanullah, M. (2018). Legal Maxim: “Every Loan That Brings Benefit Is Usury,” Its Related Issues and Implementation in Pre-Islamic and Malaysian Financial Transactions. Journal of Islam in Asia, 15(1). https://doi.org/10.31436/jia.v15i1.665
Bello, S., & Hassan, R. (2013). Application of ‘Urf in Islamic and Conventional Bank. Journal of Arts and Humanities, 2(4), 62–72.
Bilal, M., & Mydin Meera, A. (2015). Al-Muqassah Model: An Alternative Shariah-compliant Islamic Credit Card Model for Islamic Financial Institutions in Malaysia. International Journal of Islamic and Middle Eastern Finance and Management, 8(4), 418–438.
BNM. (2010). Shariah Resolution in Islamic Finance. Kuala Lumpur: Bank Negara Malaysia.
BNM. (2013). Bai’ Inah: Shari’ah Requirements and Optional Practices. Kuala Lumpur: Bank Negara Malaysia.
BNM. (2024). Policy Document on Hajah and Darurah. Kuala Lumpur: Bank Negara Malaysia.
Chowdhury, M. Masud, M., Atiullah, M., & Tanvir, J. I. (2020). Contemporary Responses to The Criticism of Islamic Banks in Malaysia. European Journal of Islamic Finance, 15. https://doi.org/10.13135/2421-2172/4307.
Ibn al-Qayyim, M. (2006). ʿIlam al-Muwaqiʿin ʿan Rabbi al-ʿAlamin (I. Al-Din, Ed.). Cairo: Dar al-Hadith.
Ibn Kathir, I. (2008). Tafsir al-Quran al-ʿAẓim. Damascuss: Muassasah al-Risalah al-Nashirun.
IFDI. (2022). Islamic Finance Development Indicator Report 2022. London: Refinitiv
IIFA. (1995). Sad Dharai (Blocking Means to Evil). Jeddah: International Islamic Fiqh Academy.
IIFA. (2009). Qarar bishani Tawarruq. Jeddah: The International Islamic Fiqh Academy.
Ishak, M. S. I. (2018). Considering Maalat as an Approach to Applying Maslahah in Reality. ICR Journal, 9(2), 147–160. https://doi.org/10.52282/icr.v9i2.118
Ishak, M. S. I. (2019a). Malaysian banking: is the current practice of ibra’ (rebate) reflecting its true meaning? Qualitative Research in Financial Markets, 11(1), 22–30. https://doi.org/10.1108/QRFM-08-2018-0096
Ishak, M. S. I. (2019b). The Principle of Maslahah and Its Application in Islamic banking operations in Malaysia. ISRA International Journal of Islamic Finance, 11(1), 137–146. https://doi.org/10.1108/IJIF-01-2018-0017
Ishak, M. S. I., Robbi, A. A. M., & Nasir, N. S. M. (2021). The Principle of Tadarruj in Islamic Finance: A Conceptual Review. Journal of Islamic Finance, 10(1), 15-24, https://doi.org/10.31436/jif.v10i1.558
Ishak, M. S. I., Zain, N. A. B., & Ahmad, A. A. (2021). The ʿUrf of Hibah on Deposits: An Analysis in the Light of New Trends in Islamic Financial Industry in Malaysia. International Journal of Fiqh and Usul Al-Fiqh Studies, 5(1), 74-81. https://doi.org/10.31436/ijfus.v5i1.228
ISRA. (2010). ISRA Compendium For Islamic Financial Terms. Kuala Lumpur: ISRA.
Kamaruddin, M. I. H., Hanefah, M. M., Shafii, Z., Salleh, S., & Zakaria, N. (2020). Comparative Analysis on Shariah Governance in Malaysia: SGF 2010, IFSA 2013 and SGPD 2019. Journal of Public Administration and Governance, 10(1), 110-131. https://doi.org/10.5296/jpag.v10i1.1615.
Khir, M. F. A. (2010). Shariʿah Parameters of Hiyal in Islamic Finance. ISRA International Journal of Islamic Finance, 2(2), 159-167.
Lahsasna, A. (2013). Maqaṣid al-Shariʿah in Islamic Finance. Kuala Lumpur: IBFIM.
Lahsasna, A. (2014). Shariʿah Issues and Resolutions on Contemporary Islamic Banking and Finance. Kuala Lumpur: IBFIM.
Mahmud, M., Hassan, M. H., & Khairul Anuar, N. F. (2018). Bayʿ wa salaf in Islamic banking current practices. ISRA International Journal of Islamic Finance, 10(2), 206–224. https://doi.org/10.1108/IJIF-01-2018-0005
Ibn Majah, A. (2007). Sunan Ibn Majah. Doha: Darussalam.
Muslim, M. (2000). Ṣahih Muslim. Doha: Darussalam.
BNM (2018). Qard, Kuala Lumpur: Bank Negara Malaysia
Sayyid Ubak, M. (2012). Al-Ijtihad al-Usuli. Riyadh: Dar Kanuz Ishbiliy.
Shafiʻi, M. (1980). Al-Umm. Riyadh: Dar al-Wafa’.
Shaharuddin, A. (2012). The Bay’ al-Inah Controversy in Malaysian Islamic Banking. Arab Law Quarterly, 26, 0–66.
Sharif, D., Shaharuddin, A., Muhamed, N. A., Pauzi, N. S., & Mohd Zin, M. Z. (2013). The improvement of Ar-Rahn (Islamic Pawn Broking) enhanced product in Islamic banking system. Asian Social Science, 9(2), 36–47. https://doi.org/10.5539/ass.v9n2p36
Shibayr, M. (2007a). Al-Muʿamalat al-Maliah al-Muʿaṣiroh fi al-Fiqh al-Islami. Amman: Dar al-Nafais.
Shibayr, M. (2007b). Al-Qawaʿid al-Kulliyah. Amman: Dar al-Nafais.
Sya’ban, M. I. (2008). Usul al-Fiqh al-Muyassar. Beirut: Dar Ibn Hazm.
Yaakub, E., Mohamed Adil, M. A., Husin, A., Muhamad, M. D., Shahruddin, M. S., & Khalid, M. M. (2014). A Revisit to the Practice of Late Payment Charges by Islamic Banks in Malaysia. Jurnal Pengurusan, 42, 185–190.
Yusoff, A. F., Ahmad, A. A., & Nik Abdul Ghani, N. A. R. (2019). Classical Tawarruq: A potential alternative to bai al-Inah in the Malaysian banking and finance industries. Arab Law Quarterly, 33(4), 400–419. https://doi.org/10.1163/15730255-12330401
