A CRITICAL STUDY ON SHARI‘AH COMPLIANT AND SHARI‘AH BASED PRODUCTS IN ISLAMIC BANKING INSTITUTIONS

Abstract

This paper aims at analyzing the concept of SharÊÑah compliant and SharÊÑah
based products in existing Islamic Banking Institutions. The paper would
shed more lights on the differences between both concepts. The main
argument which is premised on the notion that the products may be sharÊÑah
compliant but not fully Islamic is vehemently deficient due to the fact that if
the product is SharÊÑah compliant and is less Islamic, then it is basically
contrary to proper and true concept of SharÊÑah.
It is incontrovertible that sharÊÑah is the system of law based on the
commandment of Allah and the submission to such law would permit
someone to be recognized as “Muslim” A believer in Islam. However, such
kind of contradictions certainly shows the presence of shortcomings in such
products, or in process of making them compliant to SharÊÑah. Therefore,
this study is a qualitative design, which addresses lacuna of the idea of
sharÊÑah complaint may be of less Islamic ethics.
It will also examine the approach used by the Prophet- peace be unto him- to
reform the financial systems during his era. The paper will conclude by
offering four alternative approaches on sharÊÑah compliant parameters viz.;
ÑAqd approach, MaqÉsid approach, Reporting approach, and Legal
documentation of contract approach. In addition, this paper will explains the
relationships among the various approaches, as some stand as dependent
parameters, while the other stand as independent parameter. The study will
offer suggestions for future research.