The basic resources of Islamic law or fiqh do not provide express answers to each and every problem emerging out of modern conditions. However, they have laid down a set of principles on the basis of which one can find the answer to questions arising out of new problems. But the application of those principles to new situations requires a deep study of both Islamic jurisprudence and the modern pattern of human life. The exercise can only be undertaken by those individuals who are well-versed in Islamic jurisprudence and are also well-acquainted with modern economic problems.
Thus, the establishment of an Islamic order in modern banking requires a joint effort by bankers and economists on the one hand and scholars of the Shari’ah on the other.
Such a joint effort was made possible by establishing Shari’ah supervisory boards in the new interest-free banks. These boards consist of eminent Shari’ah scholars from different Muslim countries. The bankers engaged in Islamic banking operations bring their problems before these boards, which find solutions for them in the light of the principles of the Shari’ah. The resolutions of the Shari’ah boards are binding on the Islamic banks, which are expected to carry out their business in strict conformity with them.
The Shari’ah Boars of Islamic banks have opened new horizons for research, both in Islamic jurisprudence and in the banking system.
In the field of Islamic jurisprudence, they have introduced new dimensions and have made valuable additions to the juristic discussions available in the classical books of fiqh.
As Islamic fiqh relating to mu’amalah has never been applied to practical life on a collective scale in the last few centuries, it has not evolved to a point where it can deal with modern day-to-day problems in the socio-economic fields. No doubt, there have been some valuable attempts made by individual Shari’ah scholars to respond to the modern challenges, yet, having no practical value in the social set-up of their respective countries, their ideas remained only academic and theoretical and were never tested and applied in practical life.
Thanks to the Islamic banks and their Shari’ah Boards, these new ideas have now been put into practice, thus accelerating the evolution of Islamic Fiqh in the economic, financial and commercial fields.
The Shari’ah Boards of the Islamic banks are fully conscious of the fact these banks are operating in isolation from the mainstream of the conventional financial institutions, which have the backing and force the governmental and international support. Therefore, unless the interest-free economic system is established, or, at least, recognized, by the state agencies, the Islamic financial institutions will continue to face difficulties and will not be able to work with full liberty to amend their operations according to the exemplary principles of the Shari’ah. That is why the Shari’ah Boards have proposed two sets of alternatives by which the Islamic banks may abolish interest from their operations…
End of Part 2. Will continue on Part 3.