Tag: fiqh muamalat

Islamic Banking VS Conventional Banking


by: Dr. Zaharuddin Abd Rahman [al-naqiy]

Many still do not understand the differences between the products and services offered by Islamic banking and conventional banking. Many are still saying that Islamic products and services are just conventional products that have been window dressed. Some even claim that Islamic banking only changes the terms such as ‘interest’ into profit rate, ‘Ujr or wage cost, and other Arabic terms are viewed by critics as tricks. These general statements should not be made without knowing exactly how an Islamic bank operates, as such statements will inhibit the revival and development of the Islamic banking industry. We do acknowledge that there are problems in the implementation process and other problems in Islamic banking. However, in my opinion, it is normal to experience difficulty before achieving success.

All parties, whether Syariah scholars, lawyers, judges, customers or the Islamic bank administration, are still in the learning process. It is undeniable that mistakes will occur here and there throughout this process. Islamic banking is still in the process of maturity and achieving perfection. Thus, deficiencies will occur throughout this journey. Yet, these deficiencies do not make Islamic banking haram and invalid. Just like a new Muslim who has yet to perform the five daily solah (prayers) as he is in the process of learning and understanding it, this falls under the forgivable category. What really matters is that the process is heading forward (i.e. improving) and not falling backwards.

Some of the deficiencies are due to lack of knowledge amongst the administration. Consequently, people may get an inaccurate perception of Islamic banking. The Syariah strength and observance of an Islamic bank depend strongly on the hard work of various parties, inside and outside the bank. The people who determine that Syariah compliancy is adhered to are the Chief Executive Officer (CEO), the Product Development Department, the Syariah Advisor and the Syariah Department of the bank. They are responsible for Syariah compliancy within the bank.

Without hard work and wisdom, an Islamic bank or Islamic banking will take the easy route and just copy the products and systems of conventional banking, without observing the implementation aspect of the Syariah. Society should clearly understand that the Islamic banking system has revolutionized the relationship between the customer/saver and the bank. The relationship between the customer and a conventional bank is through the loan contract that entails interest on the principal. The borrower must pay the bank within the stipulated period.

Islamic banks have changed the borrowing relationship to various concepts that are acknowledged in Islam such as partnership (Musharakahor Mudharabah), or seller (bank) and buyer/renter (customer). Changes in the relationship are not only with the ‘aqad or contract, even asset ownership has changed and is accepted by Malaysian law. This means, from the legal point of view, the trading or renting process does take place. However, many customers of Islamic banks do not recognise the efforts of Islamic banks in making changes as they do not read the contracts they sign.

The partnership principle in the finance products also offers customers profit sharing with the bank. However, if the customer faces a loss, the Islamic bank will bear part of it based on this contract. A banking system devoid of riba fulfills the needs of both customers and the general public. Islamic banking, through the introduction of Islamic concepts, has successfully generated large profits in the business it participates.

Nevertheless, the main concern of Islamic banking is to ensure that every bit of its business process is Syariah compliant and this is more meaningful than reaping more profit. This main concern is a commitment, responsibility and preservation of the trust granted by Allah s.w.t. to human beings, which emphasizes the principle of cooperation amongst humans in fulfilling each respective need.

Everyone should resist from comparing the application and productsof an Islamic bank and that of a conventional bank. The “apple to apple” comparison is not fair in this case; it is like comparing the rules and discipline of soccer and hockey. Although both games are played on the field, they have completely different concepts and disciplines.

The differences are as follows: Conventional Banking Islamic Banking

Conventional Banking Islamic Banking
Its functions and operationsare based fully on man-made FUNCTIONS & OPERATIONS Its functions and operations follow the Qur’an and the Sunnah as much as possible.
In its investment product, theinvestor is promised a fixed

rate. In reality, it is a riba based

loan activity.

INVESTMENT PRODUCTS In its investment product,an Islamic bank promotes the sharing of risk andprofit between investor and investment fund manager.There is no fixed profit

promised. Division of profit is based on real profit.

Aiming for profit withoutreligious or moral boundaries. AIM Aiming for profit that adheres to Islamic discipline that is limited to that which benefit society.
Ignores zakat. ZAKAT Pays zakat as it is a social responsibility fulfilled by Islamic banks.
The retail loan product applies the system of giving out loans with multiplied interest. RETAIL LOAN Its retail product utilizes thetrading or renting of an asset,and not the loan contract.
Charging a compounding penalty on a loan if there is late payment. PENALTY Charges compensation for any late payment, but it does not go toward the bank’s earnings.Instead, it is channeled directly to charity.
The main priority is to protect the bank’s interest; no priorityis given to ensure equity development. PRIORITY Emphasize projects that benefit society. The mainaim is to ensure equity development.
Loans given by conventional banks are simple, no asset required. Their concept is “money breeds money.” REQUIREMENT OF ASSET Money is not generated through loans. Thus, any loan should have an underlying asset.
Evaluation stresses on the ability of the borrower to pay off the loan. Not much attention is given to the progress of the customer’s project. EVALUATION Evaluation also stresses on the potential or viability, performance and prospect of the project that is being financed.
Earn revenue from fixed interest charged to the customer. REVENUE EARNED Profit according to the concept of sharing profit-loss; the bank gives more attention on investing in project development.
The bank-customer relationship: loan lender and borrower. RELATIONSHIP The bank-customer relationship: seller, buyer or partner.

Excerpt from Al-Naqiy; an Islamic Finance organisation.



Introduction to the Fiqh of Mu’amalat (Jurisprudence of Transactions)

This post is extracted from the book: Money, You & Islam by Dr. Zaharuddin Abd Rahman

Retyped on site by: Muaz R.

The knowledge of Islamic finance can be further explained as follows:

Chapter 2 fig 1 edit

Based on the diagram above, it is evident that the knowledge of finance management and wealth falls under the branch of Syariah, which directs the actions and affairs of every life.

The diagram was not derived from the Qur’an or hadith, rather, the scholars of Islam formulated in order to facilitate the learning process as well as to avoid misunderstanding in every focal group of knowledge outlined above.

According to its origin, the word ‘Mu’amalat’ encompasses all the hukm (ruling) and ordainment of the Syariah in the worldly affairs of humans amongst themselves.

Ibn ‘Aabidin stated: “The components of Mu’amalat are divided into five; wealth exchange, marriage affairs, juristic affairs, inheritance affairs and amanah (trust).”

Nonetheless, a majority of the Fiqh scholars specify it to the ahkaam (rulings) pertaining to wealth only.

Part 1: Fundamental Principles of Fiqh Mu’amalat

Financial administration encompasses many forms and processes. Furthermore, it matures well with time and becomes more complicated progressively. Therefore, the scholars laid out the fundamental principles in Fiqh Mu’amalat, based on rudimentary and substantial evidences, in order to derive hukm.

“The fundamental ruling in the affairs of mu’amalat is the consideration of its intent and well-being (that can be acquired from it).”

In order to explain further on how a hukm in the affairs of mu’amalat is formulated based on the objective to be fulfilled, we look at the ruling of a ruler’s intervention in setting the market price of an item. It is narrated in a hadith:

“The prices had spiked during the time of the Prophet s.a.w. So, the people said, “O Messenger of Allah, fix prices for us.
 Thereupon the Messenger of Allah said, “Verily, Allah is the one Who fixes prices, Who withholds, Who gives lavishly and provides, and I hope that when I meet Allah, none of you will have any claim on me for an injustice regarding blood or property.”

(Related by: Abu Dawood, no 3451; At-Tirmidhi, 1/247: Ibn Hibban, Ibn Hajar and Albani: Sahih)

The scholars view the prohibition of ‘setting’ a particular price during the time of Prophet Muhammad s.a.w. from the perspective of fulfilling the objective of upholding justice. It is based on the above-mentioned principle that highlights:

“The fundamental ruling in the affairs of mu’amalat is based on reasons and objectives.”

After a thorough analysis, the scholars agree unanimously that the maqasid (objective) behind the Prophet s.a.w.’s rejection of his companion’s appeal was to prevent injustice and violation of the seller’s rights in gaining profit according to the market price. Furthermore, there was no oppression during that period.

Nevertheless, when a monopoly on certain items occurred during the time of the taabi’een (the generation following the companions), the scholars of that time, such as Sa’id ibn Musayyab, Yahya ibn Sa’id al-Ansari and others, unanimously agreed that it was permissible upon the Islamic ruler to set a ‘maximum price’. This was, in fact, to prevent injustice upon the buyers. In the previous daleel (evidence), Prophet Muhammad s.a.w. intended to prevent injustice upon the sellers, while in this very case, the scholars of taabi’een derived the hukm of the ‘prohibiton’ to be permissible due to the maqasid to be fulfilled, which was to prevent injustice upon the buyers.

Part 2: Contracts of Islamic Mu’amalat

Chapter 2 fig 2 edited

Each contract entails its own conditions and pillars. In certain cases, one transaction may include two or three contracts. Thus, it is recommended that all the conditions of the contracts are observed.

Part 3: Pillars and Conditions of trading in Islam

The definition of trading in Islam is:

“Exchanging the ownership of property with another property for owning and being owned upon eternity.”

The scholars unanimously agree that trading is lawful based on very clear evidences such as:


“…Allah has permitted trading.”

[Al-Baqarah 2:275]

“But take witnesses whenever you make a commercial contract.”

[Al-Baqarah 2:282]

In order to gain profit, a financial institution usually uses a trading contract with customers. For that purpose, both parties must observe the pillars and conditions of trading.

Below is the summary:

Chapter 2 fig 3 edited

End of Chapter 2: Introduction to the Fiqh of Mu’amalat (Jurisprudence of Transactions) of the Islamic Finance Series.

– Money, You & Islam by Dr. Zaharuddin abd Rahman

Riba Dalam Jual Beli – Ustaz Zaharuddin Abdul Rahman

[Excerpt from rudyherman.com]

Riba Dalam Jual Beli
Ustaz Zaharuddin Abdul Rahman
Rakaman program Bicara Muamalat, IKIM FM

Allah menghalalkan jual beli dan mengharamkan riba.

Allah berfirman bahawa di akhirat orang yang makan riba akan dibangkitkan dalam keadaan disantau kerana di dunia mereka mengatakan jual beli sama dengan riba.

Dari ayat ini, ulama berbincang apakah beza jual beli dengan riba.

Cabaran umat Islam kini ialah untuk mengenal pasti mana satu untung yang haram dan untung yang halal. Di antara bentuk yang serupa tapi tak sama:

  • Orang A beri pinjam kepada B $1000 tetapi minta dipulangkan $1200. A akan untung $200. Ini riba.
  • Jual beli pula, seseorang itu membeli sebuah laptop dengan harga $1000 dan menjual semula dengan harga $1200. Untungnya $200.

Imam Ibnu Abbas mengatakan riba itu ada penambahan yang halal dan ada penambahan yang haram.

Penambahan yang halal melibatkan penjualan aset. Seseorang itu menjual komputer dan dengan itu ramai orang lain dapat manfaat daripada urus niaga itu, seperti pembekal, pekerja komputer mendapat manfaat dan sebagainya.

Riba hanya menguntungkan satu pihak sahaja.

Walaupun jual beli berbeza dengan riba tetapi riba juga boleh terdapat di dalam jual beli.

Hadith: “Emas dengan emas (ditukar atau diniagakan), perak dengan perak, gandum dengan  gandum, barli dengan barli, tamar dengan tamar,  garam dengan garam mestilah sama timbangan dan  sukatan, dan sekiranya berlainan kategori ini, maka berjual belilah kamu sebagaimana yang kamu sukai  selagi ia dilakukan secara tunai.”

Jadi kalau bercanggah dengan apa yang disebut iaitu sama berat dan serta-merta, maka jadilah riba.

Contohnya, A tukar dengan B 10g emas dan B berikan 11g emas, maka sudah jadi riba fadl. Jika A berikan 10g emas dan B berikan 10g emas dalam bentuk yang lain tetapi B berikannya esok, maka hukumnya riba nasiah.

Hukum asal dalam muamalah mesti melihat kepada illa (sebab berkesan, effective cause), dan jika illa itu ada dalam sesuatu transaksi, maka hukumnya ada. Jika tidak ada illa maka tidak ada hukumnya.

Usul fiqh: Hukum akan bersama dengan illa, ada dan tiada.

Illa sifatnya mesti berlaku sama kepada semua orang (standard). Illa juga boleh diguna kepada benda-benda lain dan tidak semestinya emas dan perak.

Maka ulama hari ini berbincang bagaimana status wang kertas, kerana wang kertas tidak ada di zaman Nabi. Ulama memutuskan wang kertas telah mengambil tempat mata wang emas yang digunakan dulu. Wang kertas ada illa seperti wang emas yang ada pada zaman nabi.

Mengikut pandangan Imam Ahmad dan sebahagian ulama Maliki, Nabi menyebut emas dan perak kerana emas dan perak  mempunyai (mutlaq thamaniyah) pengiktirafan kepada nilainya iaitu siapa yang mengiktiraf nilainya sebagai medium pertukaran maka ia akan menjadi mata wang.

Wang kertas tetap kertas tetapi nilainya diiktiraf sebagai mempunyai nilai pertukaran. Contohnya, A tukar sebatang pen dengan wang kertas $10, penerima $10 itu bersetuju walaupun wang kertas itu hanya sekeping kertas. Maka illa itu telah berpindah dari emas perak kepada wang kertas. Oleh itu, dalam pertukaran wang kertas maka pastikan jangan melanggar dua syarat iaitu penambahan dan penangguhan, jika tidak ia menjadi riba.

Masalah kedua, wang kertas wujud dalam bentuk wang dari pelbagai negara. Maka setiap negara mewakili item yang berbeza. Emas tukar dengan perak mesti serah terima dalam satu masa tetapi berat berbeza tidak mengapa jika tidak sama. Begitulah hukum duit kertas jika hendak tukar wang ringgit dengan dolar, serah terima mesti satu masa tetapi nilai boleh berbeza.

Contoh: Tukar wang $100 di bank, bank kembalikan $95. $5 ialah caj pentadbiran. Hukumnya riba fadl kerana pertukaran $ dengan $ tidak sama nilai.

Contoh: Tukar wang $100 di bank untuk mendapatkan wang kecil. Tetapi dalam masa pertukaran kita beredar untuk ke tandas. Perbuatan beredar ke tandas itu sudah menjadi riba nasiah sebab tidak berlaku dalam satu masa.

Nabi tidak menggalakkan untuk kerap membuat pertukaran kerana wang kertas ialah medium of exchange bukan untuk jual beli wang itu. Jika tidak, fungsi mata wang sudah rosak seperti yang dikatakan oleh Imam Ghazali.

Tukar wang di pengurup wang hendaklah tukar dan terima dalam satu masa.

Dalam insurans konvensional, dengan membayar premium kita akan mendapat wang berganda jika berlaku sesuatu kejadian. Sepatutnya nilai wang mesti sama. Tetapi sebahagian ulama menganggap sebagai riba dan ada ulama yang tidak menganggap sebagai riba. Insurans ada elemen riba dan elemen judi.

Contoh: A beri $1000, B berikan pada masa lain, ini juga riba.

Contoh: Membeli emas wafer atau syiling tetapi bayarannya tangguh. Emas adalah emas, mata wang seperti perak. Maka emas tukar dengan perak syaratnya mesti dalam satu masa, jika tidak jadi riba.

Pembelian ini boleh bayar secara tunai atau menggunakan cek. Cek, bayaran online (TT) atau debit card juga dianggap sebagai tunai.

Pembelian emas perhiasan ada khilaf. Ikut empat mazhab pembelian perhiasan dikira sebagai emas kerana perhiasan wanita masih dikenakan zakat. Kalau ia bukan sifat emas maka ia tidak dikenakan zakat.

Ulama kontemporari berpendapat pada waktu ini ramai orang beli emas perhiasan secara bertangguh. Jika difatwakan dengan fatwa yang melarang maka keadaan akan menjadi lebih mengelirukan. Rasulullah jika diberikan pilihan dua perkara maka Rasulullah akan mengambil yang mudah selagi yang mudah tidak bercanggah dengan hukum.

Ulama Malaysia mencari hukum yang mudah kerana masyarakat di Malaysia belum cukup kefahaman dalam bab ini. Maka fatwa diambil dari fatwa Muawiyah Abu Sufyan dan Sh Yusuf Qardhawi yang mengharuskan kerana keperluan membeli emas perhiasan walau secara bertangguh.

Saya (Ust Zaharuddin) nasihat kepada diri saya dan tuan-tuan, kalau boleh elak, maka jangan terlibat. Nabi bersabda, tinggalkan apa yang kamu ragu kepada apa yang tidak kamu ragu.

Mengenai medical card.

Jual beli emas dan masukkan khidmat ar rahnu. Penjual jual emas kepada pembeli. Tetapi pembeli tidak cukup wang. Penjual pembeli pergi ke bank, pajak di bawah nama pembeli. Penjual mengambil wang pinjaman dari bank dan baki harga emas ditambah oleh pembeli. Maka penjual sudah dapat pembayaran penuh bagi emas tersebut. Pembeli bayar ansuran kepada ar rahnu.

Saya buat satu perkhidmatan pembayaran melalui kad kredit. Bagaimana hukum pelanggan menggunakan kad kredit konvensional?

Melabur emas cara bukan Islamik, hanya dapat buku yang mengatakan berapa kilogram yang dibeli. Beli permata, adakah kena zakat? Beli gold bar, satu ada ukiran dan satu tidak ada ukiran. Ukiran dikenakan upah. Apakah hukumnya upah itu?