Friday, November 19, 2010

The Need for Maqasid al- Syariah in the Management Strategy of Current Islamic Banks

The Need for Maqasid al- Syariah in the Management Strategy of Current Islamic Banks



Academic Fellow & Executive Director, INSANIAH Global Centre of Excellence

INSANIAH University College, Kedah Malaysia


The management of Islamic financial institutions such as Islamic banks and Islamic insurance companies should look beyond profit. Although profit is very important for the institution to be able to exist, it is not the main objective of the institution. Profit is just like oxygen in our bodies which is essential for us to stay alive, but which is not the main objective.

This paper attempts to examine the management strategy of current Islamic institutions, particularly Islamic banks, in the light of their moving towards maqasid al-Syariah or, in other words, ‘the spirit of the Islamic Syariat’.

Muslim scholars are of the opinion that the ultimate objectives [maqasid al-Syariah] which are a necessity [al-daruriyyah] for mankind to be able to live peacefully in this world, according to al-Quran and al-Sunnah, include five main areas – [1] protection of life, [2] protection of al-Din [Islam], [3] protection of human generation, [4] protection of intellect, and, lastly, [5] protection of wealth or resources. From a review of the related literature, little is mentioned or discussed about Islamic banks working towards achieving these ultimate objectives or maqasid al-Syariah.

This paper also attempts to answer the question of whether the current Islamic banks owned by non-Muslims will be able to incorporate maqasid a-Syariah into their management strategies.

What are the objectives of the many conventional banks which are rushing to convert themselves into “Islamic Banks” or open windows of “Islamic Banks”? Are they attracted to the ultimate objectives [maqasid al-Syariah] as advocated by Islam? Or are they attracted to make profits from the abundant wealth of Muslims?

Attempts are also made in this paper to examine the possibility of Islamic banks owned by non-Muslims being sustainable if, and only if; they incorporate maqasid al-Syariah into their strategy of existence. Also, is there is any rationale whatsoever for countries predominantly populated by non–Muslims and governed by non-Muslims becoming Islamic Financial Centres? London, Singapore and Hong Kong are all planning to establish such centres, and the question arises as to whether maqasid al-Syariah is being incorporated into their blueprints for creating these centres?

This paper tries to put across the view that the current practice of Islamic banks needs to incorporate maqasid al-Syariah into their management strategy. Otherwise, the use of the word ‘Islamic’ should be dropped. Furthermore, it proposed that the term ‘Islamic Bank’ should be reviewed, and should only be used to refer to an ‘Islamic Bank’ owned and managed by Muslims. This is because Muslims are the only community [ummah] recognised by Allah which can or should uphold maqasid al-Syariah. Islamic banks owned by non-Muslims may be called ‘Interest Free Banks’.

An Overview of Maqasid al-Syariah


Maqasid al Shariah

1 Imam al Syatibi's Opinions


1.1.1 Category 1

1. Al-daruriyyah = Necessary Factors

  • 1. Protection of Human Life
  • 2. Protection of Religion [Islam]
  • 3. Protection of Protection of Human Generation
  • 4. Protection of Human Intellect
  • 5. Protection of Wealth and Resources

2. Al- hajiyyah= Requiring Factors to eliminate difficulty in life

  • 1. Ibadat
  • 2. Adat [Common Practices]
  • 3. Muamalat [Business]
  • 4. Jenayat [Criminal Laws]

3. Al- tahsinniiyyah = Complementing Factors

  • 1. Mahasin al-adat [Good Culture]
  • 2. Al-ahwal al- mudannisat [Disgraceful Elements]

1.1.2 Category 2

  • 1. Compulsory to understand Arabic

1.1.3 Category 3

  • 1. Responsibility beyond Human Capability
  • 2. Responsibility within Human capability

1.1.4 Category 4

  • 1. Implementation for everyone without exception


1.2.1 1. Feeling that the practices are in line with Allah's requirements

1.2.2 2. Determining objectives which are probably in line with the rules of Allah

1.2.3 3. Implementing any directives for the obedient to the rules of Allah

2 Imam Ibn 'Asyur's Opinions

2.1 General Objectives

  • 2.1.1 Getting Benefit
  • 2.1.2 Rejecting Harmful & Destruction

2.2 Special Objectives

  • 2.2.1 munakahat [nikah]


1. I will presenting this paper at the LIFE [Langkawi Islamic Finance & Economics] International Conference to be held on 13 - 15 December at Langkawi:

2. If you wish to put your ideas please give your kind comments or e-mail to me :

3. If you wish to have a copy of full paper please e-Mail to me:

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