The article Introduction to Islamic finance explains what is Islamic Finance. The article also explains the reasons for Islamic Finance. Muslim community needs to ensure their business conduct and dealings are consistent with the Shariah requirements. Hence, it drives the need for Islamic Finance.
In order to comply with Shariah requirements, Muslims must observe certain rulings. Some of these rulings are direct commands from Allah. For instance, the prohibition of riba’. In contrast, Muslims derive some other rulings from other sources.
For this round, let’s us understand what are the sources of the Islamic rulings. These rulings govern Muslim commercial transactions and dealings.
The sources of Islamic laws
There are two sources of Islamic laws – the primary source and the secondary source. They are as follows:
Let’s dive deeper into each and every of these sources that contributes to Islamic laws. Consequently, how they affect Islamic financial conduct and transactions.
The primary sources of Islamic laws
There are four primary sources of Islamic laws:
- Firstly, is Al-Quran.
- Secondly, As-Sunnah.
- Thirdly is Ijma’.
- Lastly, is Qias.
For Muslims, Al-Quran is the main source of Islamic laws (top priority). The verses in Al-Quran are the actual words from Allah. They are revealed through the Prophet Muhammad (PBUH).
Muslims do not question the injunctions in Al-Quran because they are the direct command from Allah. The commands in Al-Quran are not only relating to muamalat, but also cover various aspects of Muslim life such as political, legal, and family affairs. Hence, the reason why Islam is the way of living than just merely a religion for the Muslims.
The relationship between Al-Quran and Sunnah
Take note that Al-Quran does not provide detailed guidance and rulings on all the commandments. Al-Quran explains some commandments in detailed such as ruling relating to the distribution of inheritance as stated in Surah Al-Nisa, verse 11 below:
يُوصِيكُمُ اللهُ فِي أَوْلٰدِكُمْ لِلذَّكَرِ مِثْلُ حَظِّ الْأُنثَيَيْنِ فَإِن كُنَّ نِسَاءً فَوْقَ اثْنَتَيْنِ فَلَهُنَّ ثُلُثَا مَا تَرَكَ وَإِن كَانَتْ وٰحِدَةً فَلَهَا النِّصْفُ وَلِأَبَوَيْهِ لِكُلِّ وٰحِدٍ مِّنْهُمَا السُّدُسُ مِمَّا تَرَكَ إِن كَانَ لَهُ وَلَدٌ فَإِن لَّمْ يَكُن لَّهُ وَلَدٌ وَوَرِثَهُ أَبَوَاهُ فَلِأُمِّهِ الثُّلُثُ فَإِن كَانَ لَهُ إِخْوَةٌ فَلِأُمِّهِ السُّدُسُ مِن بَعْدِ وَصِيَّةٍ يُوصِي بِهَا أَوْ دَيْنٍ ءآبَاؤُكُمْ وَأَبْنَاؤُكُمْ لَا تَدْرُونَ أَيُّهُمْ أَقْرَبُ لَكُمْ نَفْعًا فَرِيضَةً مِّنَ اللهِ إِنَّ اللهَ كَانَ عَلِيمًا حَكِيمًا
“Allah commands you regarding your children: the share of the male will be twice that of the female. If you leave only two or more females, their share is two-thirds of the estate. But if there is only one female, her share will be one-half. Each parent is entitled to one-sixth if you leave offspring. But if you are childless and your parents are the only heirs, then your mother will receive one-third. But if you leave siblings, then your mother will receive one-sixth—after the fulfilment of bequests and debts. Be fair to your parents and children, as you do not fully know who is more beneficial to you. This is an obligation from Allah. Surely Allah is All-Knowing, All-Wise.”
However, some other commandments are not explained. For example, Muslim obligatory act to perform prayer. Although Al-Quran commands for Muslims to perform prayer, Al-Quran does not explain on how to perform prayer. In such a situation, the role of Sunnah comes in to explain these commandments.
The principles in making decisions
Al-Quran also states some general guidance for the jurists to deduce appropriate decisions to many contemporary issues faced by the Muslims. They are:
- principle of justice;
- the principles in property acquisition;
- principles of consultation;
- principles of individual accountability;
- principle of equality;
- principle where necessity makes prohibited things permissible; and others.
Among the Muslims, Sunnah is view as the second source of Islamic laws. The scholars of hadith agreed that sunnah refers to all what was narrated by the Prophet Muhammad (PBUH). It includes his actions, sayings and actions or decisions that he has tacitly approved or disapproved.
Allah s.w.t clarifies through his words in Al-Quran, Surah Al-Najm, verses 3 and 4 that whatever originated from the Prophet Muhammad (PBUH) did not come out from himself. They are rather the inspiration from Allah as follows:
﴾ɛ﴿وَمَا يَنطِقُ عَنِ ٱلْهَوَىٰٓ ﴿٣﴾ إِنْ هُوَ إِلَّا وَحْىٌ يُوحَىٰ
“Nor does he speak from [his own] inclination. It is not but a revelation revealed.”
The verse gives sunnah the authority as the second source of Islamic laws. There is no dispute on the authority of Sunnah among the Muslims community.
In the last sermon of the Prophet Muhammad (PBUH), he reminded the Muslims to hold fast to Al-Quran and Sunnah. The Prophet was narrated saying “I leave behind me two things – the Quran and the Sunnah and if you follow these you will never go astray.” His words emphasise the significance of the Sunnah among Muslim community.
The roles of Sunnah
What are the roles of Sunnah? Islamic scholars have identified three main roles of Sunnah as follows:
- Sunnah explains and provides detailed elaboration on the injunctions in the Al-Quran. Using the example earlier, Al-Quran commands the Muslim to perform prayer. But Al-Quran does not explain how to perform prayer. How to perform prayer is then explained when Prophet Muhammad (PBUH) commanded “Pray as you have seen me praying”.
- It reiterates the commandments in Al-Quran. Sunnah derives its guidance from Al-Quran and uses this guide to remind or re-emphasise the commandments of Allah.
- To specify the general injunctions in Al-Quran. For example, Allah through Surah Al-Maidah verse 3 forbids Muslims to consume dead animals. The Sunnah further clarifies this commandment that Muslims are permissible to consume dead animals of the sea.
Where can you find all the Sunnah of the Prophet Muhammad (PBUH)? There are six authentic books of the Sunnah as follows:
- The Sahih of al-Bukhari
- The Sahih of Muslim
- The Sunan of Al-Nasa’i
- The Sunan of Abu Daud
- The Al-Jami’ of Al-Tirmizi
- The Sunan of Ibn Majah
The term ijma’ (consensus of opinion) refers to the unanimous agreement or consensus of people on something. The majority of jurists regarded ijma’ as the third source of Islamic laws and rulings after Al-Quran and Sunnah.
So, who were these people who gave the consensus of opinion? These people are mujtahid (a qualified scholar). Mujtahid is a source of reference for the Muslims after the passing of Prophet Muhammad (PBUH).
The three requirements below must be satisfied in order for Ijma’ to be valid:
- There must be several mujtahiddin exist at the time the opinion is to be given.
- Mujtahiddin must unanimously agree on the decision. If there is any differing view (even for a small minority), the possibility of ijma’ cannot be achieved.
- The agreement of mujtahiddin must be demonstrated either in verbal or in writing.
Qiyas is an analogical deduction or analogy (similitude of circumstance). Analogy means extending the Shariah rules from an original case to a new case based on the shared ‘illah (attribute of an event or case).
Qiyas is essentially a process of determining the permissibility or non-permissibility of an act or transaction in the new case by applying analogy to the original case. Importantly, the ruling on the original case must have been established by Al-Quran and the Sunnah for it to be able to be used as Qiyas for the new case.
One of the examples of qiyas is the prohibition of drugs. The prohibition of drugs is analogised to the direct prohibition of wine or alcohol in the Al-Quran (Surah Al-Ma’idah verse 90). This is because its consumption will cause intoxication and harm to humans. As the effect of the drug is similar to wine, it also concludes the prohibition of improper use of the drug for Muslims.
Both the primary sources and secondary sources govern the Islamic laws and rulings for the Muslim community, including their commercial dealings and transactions. It is important to understand these sources as they provide some perspectives on the permissibility and non-permissibility of transactions in Islamic finance.
We will discuss more on the secondary sources of Islamic rulings in our next article.