ISLAMIC BANKING AND FINANCE IN THE LIGHT OF MASLAHAH AND MAQASID AL-SHARI ‘AH IN MALAYSIA

Abstract

In Malaysia, the Islamic Banking and Financing Operation (IBFO) has successfully established as a modern Mu‘amalat product and service. The existence of IBFO is to achieve Maqasid al-Shariah that is to execute its operation without involving riba or interest. Today, Malaysia has become the largest player in the contribution of IBFO along with Saudi Arabia. Malaysia also plays an important role in the development of IBFO, especially in introducing the new product of IBFO. However, some Syariah principles of IBFO products are still disputed among Islamic scholars. Therefore, this study aims to critically discuss and examine four Islamic banking and financing (IBF) principles such as Bai’ al- ‘Inah, al-Tawarruq, Bai’ Bi Thaman Ajil, and Murabahah. Some Muslim communities could not understand these Islamic, banking principles unless they are based on the mechanism of Maslahah and Maqasid. Perhaps these mechanisms might be able to illustrate how the operations can fulfill the Muslim’s needs in financing and banking. Perhaps this study also might be able to provide a clear explanation of IBFO that will lead the Islamic banking system and will continue in offering Shariah-compliant products and services to Muslims and non-Muslims