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Islamic Finance 1st - Maqasid Al Shariah

IM Insights
By IM Insights
1 month ago
Islamic Finance 1st - Maqasid Al Shariah

Islam, Maqasid, Shariah, Shariah compliant, Takaful, Provision

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  1. SALIHIN ACADEMY | OCTOBER 2020 | ISSUE NO. 4 ISLAMIC FINANCE 1ST Islamic Finance 1st is a Monthly Islamic Finance e-Notes published by SALIHIN Academy - Maqasid al-Shariah Editor's Note: The theme for this month Islamic Finance e-Notes is Maqasid al-Shariah, where in this edition, we aim to briefly highlight the concept of this term. Maqasid-al-Shariah is basic concept in Islam serves as a foundation or pillar for various fields of knowledge and practice, such as Islamic Finance, Economics, Wealth Management and Social Development. Knowledge model that is built based on Maqasid al-Shariah will develop a strong and clear framework to solve arising issues or ambiguity of the subject matters. In general, Maqasid al-Shariah is is utilized to serve as a guiding principle in our daily activities. Maqasid al-Shari'ah The terminology Maqasid al-Shariah, in general, means purpose and wisdom behind the enactment of all or most of the Shari’ah rulings. Specifically, it is defined as as specific target to the objectives that are designed for the people in their daily activities, such as the application of Islamic finance (Ibn Ashur). Other scholar, namely Alal al-Fasi defined Maqasid al-Shariah as the end that is sought for each enactments of the Shariah rulings and the secrets or justification involved. Maqasid al-Shariah encompasses: Universal objectives and values that are consistent with Shariah Public interests of people, society at large and universe High moral standards/ virtues Avoidance of immoral behavior/ vices SALIHIN Academy 1
  2. SALIHIN ACADEMY | OCTOBER 2020 | ISSUE NO. 4 Classification of Maqasid al-Shariah Maqasid al-Shariah is divided into three major categories as follows: Necessities/ Essentials (Daruriyyat) Needs (Hajiyyat) Necessities (Daruriyyat) are the one that people depended on and and absence of it will make the whole society collapse. Fundamentals of Daruriyyat are: Needs (Hajiyyat) refers to the supporting and interests required for life. The life without these needs lead to hardship and may affect the social functions. Protection of Religion (al-Din) Protection of Life (al-Nafs) Protection of Intellect/ Mind (al-Aql) Protection of Human Being (al-Nasl) / Family (al-'Ird) Protection of Property (al-Mal) Shatibi defined Hajiyyat as “Something that is needed to attain comfort and alleviate hardship. If it is neglected, human subjects (mukallafin) will suffer hardship. Examples: Development of an integrated transportation infrastructure to link rural and urban areas as well as countries worldwide, provision of sale contracts such as salam & istisna Complementary/ Embellishments (Tahsiniyyat) Complementary or embellishments (tahsiniyyat) refers to the interest which improve the society, quality of life, and increase the moral and spiritual in the Muslim society. The non-existence of complementary does not affect the society function, and will not interrupt the normal process of life in the society. The nation will become a model for others if the complementary needs are provided for its people. Examples: Development of shopping malls, recreational parks and provision of voluntary contracts (eg. hibah, sadaqah, waqf) Adoption of Daruriyyat to fight COVID-19: Movement Control Order (MCO) Adoption of Online Learning for Schools Requirement to Wear Mask Adoption of Moratorium - Protection of Life - Protection of Intellect - Protection of Human Being - Protection of Property 2
  3. SALIHIN ACADEMY | OCTOBER 2020 | ISSUE NO. 4 Concept of Maslahah & Mafsadah in the Context of Maqasid al-Shariah Maqasid al-Shariah sets the parameters for the concept of maslahah (benefit) and mafsadah (evil) framework. Therefore, maslahah and mafsadah in the context of Maqasid al-Shariah is depicted in the diagram below. Minor Mafsadah in Major Maslahah is Tolerated Minor Maslahah in Major Mafsadah is Rejected Minor Maslahah Minor Mafsadah MM Maslahah Mursalah Mafsadah (Evil) Preventing Preventing Evil Maslahah (Benefits) Promoting Prevail Source: Maqasid al-Shariah in Islamic Finance, Ahcene Lahsasna (IBFIM Publication) The positive side represents maslahah which acknowledged by the Lawgiver, whereas the negative side represents the maslahah which is rejected by the Lawgiver Shariah promotes and allows the positive maslahah due to the realized benefits, whereas prohibits the negative maslahah due to the prevailed harm, damage and evil. A minor mafsadah in the scope of maslahah is ignored by Shariah due to the major benefits that existed. Therefore, maslahah is accepted and minor mafsadah is tolerated. A minor maslahah in the scope of mafsadah is not acknowledged by Shariah due to the major evil existed. Therefore, minor maslahah is rejected. This fundamental philosophy of Shariah is based on the argument that there is no pure maslahah or pure mafsadah; maslahah always being associated with minor mafsadah and mafsadah is always being associated with minor maslahah. In this case, Shariah weight and accept major maslahah with minor mafsadah and reject minor maslahah in major mafsadah. 3
  4. SALIHIN ACADEMY | OCTOBER 2020 | ISSUE NO. 4 Practical Aspect of Maqasid al-Shariah Maqasid al-Shariah & Wealth To increase halal (permissible) wealth in Shariah To encourage mankind to work where it is regarded as ʿibadah To protect wealth through the takaful scheme To cleanse and purify wealth in forms of zakat and sadaqah To contribute to the society the legitimate income generated for further improvement of the society, Islam and nation Maqasid al-Shariah & Islamic Banking To provide an avenue for the purpose of saving to secure the financial future To create a pool of fund to provide liquidity in the form of different types of financing to fit different business activities To encourage local and international trade markets where it links buyers and sellers in the marketplace. To protect and preserve wealth through risk mitigation tools and instruments To facilitate the circulation of wealth to many hands as much as possible through the trade and finance instruments Maqasid al-Shariah & Financial Planning To develop and invest wealth To circulate wealth in business transaction through a proper financial planning and management To provide transparency in wealth and finance To prevent harm and hardship through wealth management To ensure justice in circulation of wealth To preserve and protect the wealth Maqasid al-Shariah & Islamic Economics & Finance To promote stability of economics, finance & business To ensure justice in business and finance To instill the principle of equity To establish contracts/ instruments in acquiring property and wealth To circulate wealth in financial system To preserve and protect wealth To promote transparency in business and trade To prevent harm and hardship in business and finance 4
  5. SALIHIN ACADEMY | OCTOBER 2020 | ISSUE NO. 4 Relationship of Maqasid al-Shariah Maqasid al-Shariah & Takaful To protect life of a person (the contributor) who died, or become disabled, and his or her family To protect property from damage and destruction To promote values of shared responsibility, mutuality, cooperation, brotherhood, joint indemnity and solidarity in the society To eliminate prohibited elements from the marketplace To give opportunities to the participants for investment elements in addition to the protection purpose Maqasid al-Shariah & Islamic Capital Market To attract the saving fund and channel it to the Shariah compliant productive purposes in Shariah compliance manner To provide liquidity in the market through primary market and secondary market To ensure the investment is made in Shariah compliant capital market products such as sukuk Maqasid al-Shariah & Corporate Governance To ensure a proper management of the organization according to the principle of Shariah To ensure the accountability, responsibility, transparency & fairness in decision-making process To create check and balance system with the goal of enhancing shareholder value and stakeholders while protecting the interests of Shariah To promote honesty and good ethics, while preventing breach of trust, receiving income from nonhalal sources, price manipulation, dishonesty, fraud and bribery Maqasid al-Shariah & Islamic Stock Market To determine the permissible activities in the marketplace To enable the Muslim investors to acquire profit and wealth in Shariah compliant manner To create liquidity in the market To expand the scope of trade and sale, where there is a movement from a traditional market to sophisticated market To promote risk sharing concept in the investment community specifically in stock market and equity market 5
  6. SALIHIN ACADEMY | OCTOBER 2020 | ISSUE NO. 4 Maqasid al-Shariah in Islamic Finance To circulate wealth To ensure the continuity of wealth investment To achieve comprehensive communal prosperity To achieve financial transperancy To prevent harm & hardship in wealth & finance To ensure justice in circulation of wealth in business transactions Islamic Financial Planning Based On Maqasid al-Shariah Financial planning dimension in Islam covers five areas; Wealth Creation, Wealth Generation, Wealth Purification, Wealth Protection and Wealth Distribution. WEALTH CREATION Creation of wealth is not due to our effort, but that God is the one that makes it possible. WEALTH GENERATION In Islam, wealth must not be kept idle, but should be invested in productive activities based on the Shariah principles. EDITORIAL & DESIGN TEAM Dr. Ahcene Lahsasna Zarina Md Desa Nur Amira Rosli Nurdiyana Sabrina Abdul Rahman WEALTH PURIFICATION Wealth needs to be purified for two reasons; to cleanse income earns from unknown illegal sources to share part of the wealth with others especially the needy group of the society WEALTH PROTECTION WEALTH DISTRIBUTION Takaful scheme is one of the ways to reduce the financial risk such as financial losses due to accident and misfortunes. Wealth distribution deals with what a Muslim leaves behind upon death and plan his assets according to Shariah (faraid, hibah, will). PRODUCED & PUBLISHED BY FOLLOW US SALIHIN Academy Sdn. Bhd. Email : ssa@salihin.com.my Tel: +603 6185 9970 Fax: +603 6184 2524 @salihinshariah 6