Why Shariah Compliance is fundamental in Islamic finance? Theory of Indebtedness Al-Mithaq Prof. Saiful Saiful Azhar Rosly, Rosly, Ph.D
[email protected] International Center for Education in Islamic Finance (INCEIF) www.inceif.org
Islamic finance is replete with opinions issued by Shariah advisors concerning legitimacy of Islamic financial products. Opinions on Shariah screening, validation of contracts, and capital and money market instruments are sought after in fulfilling the demand of pious investors and dedicated Islamic banks and fund managers. The question is, what is the reason for Shariah complaint? Or simply why obey the Shariah? The believer (mukallaf) (mukallaf) should be able to give convincing answers concerning his belief (iman ( iman). ). Answers that make sense. One answer lies in the theory of indebtedness ( al-Mithaq). al-Mithaq). It is explained in the following paragraphs. In general Islam means submission. Sometimes Islam is called al-Din. But how does “submission” appear important in explaining Islam. This has a lot to do with the meaning of indebtedness. In fact one of the meanings of Din is indebtedness and originates from the Arabic root word DYN. It is this notion of indebtedness indebtedness that gives deeper meaning to the reason for human economic existence in Islam. But in what way is the concept of indebtedness related to man’s relation with God. Why is man indebted to God, and what is he supposed to do under such a situation of indebtedness? The Quran says, “Man, We did create from a quintessence of clay. Then We placed him as a drop of sperm in a place of rest, firmly fixed. Then We made the sperm into a clot of congealed blood; then out of that clot We made a lump; then We made out of that lump bones and clothed the bones with fresh; then We developed out of it another creature. So blessed be God, the Best to create”. ( Al-Mu’minun ( Al-Mu’minun {23}:1214). 14).
Based on the above Quranic verse, man is indebted to God, his Creator and Provider, for bringing him into existence and maintaining him in his existence. Man once did not exist, and now he does. Certainly, when a person is in debt he is supposed to repay it. But how is man supposed to to repay the debt? Certainly God is in no dire need of anything as He is the Creator and Sustainer, but the debt than man owes God must be paid. Naquib Al-Attas says that in Islam, paying or returning the debts means to give himself up in service, or khidmah, to his Lord and Master, to abase himself before Him - and so the rightly guided man sincerely and consciously enslaves himself for the sake of God in order to fulfill His Commands and Prohibitions and Ordinances, and thus to live out the dictates of His Law. It is clear now that the meaning of man’s existence is related to his indebtedness to the Creator his subsequent enslavement to His law is the way how man settle his debt. Man himself is the object of the debt. debt. In fact the Covenant that man sealed with God, when He says, ‘Am I not your Lord”, and man’s true self testifying, answered: Yea!”, requires man to manifest the Covenant ( Al-Mithaq ( Al-Mithaq)) through his submission in absolute true willingness. By obeying God’s commandment, the believer has indeed submits his desires to God’s Will. This is the way how he pays his due due to the Creator. Thus in Islamic finance, Shariah compliance means submitting business transactions conducted by man to God’s Law which include the prohibition of riba (interest), gharar(ambiguities), maisir(gambling), jahala(fraud) in financial transaction. The theory of indebtedness (al( almithaq) mithaq) is in play here to explain why Muslims dutifully observe Shariah principles in the conduct of business and financial transactions.
