Islamic Banking & Finance Page 27-03-2020

Taqleed or Ijtihad- which way suits to develop Islamic Banking and Finance

Islamic Banking and Finance is on expansion but still it has to answer various questions. Basically Islamic financing is based on two areas i.e. Non Debt based i.e. Musharkah, Mudarbah and Ijarah. Another is Debt Based I.e. Murhabah, Salam, Istisna.

The prohibited areas where Islamic Banking and Institutions can not invest are financial services that feature transactions based on interest, speculation or gambling, Companies whose core businesses involve alcohol, pork products, or other meat that’s not slaughtered according to sharia law. The tobacco industry and activity related to illegal drugs, casinos, online lotteries, lotto draws, and betting transactions are also prohibited. sharia forbids the production of weapons of mass destruction. Sharia prohibitions also apply to adult entertainment products, including magazines, videos, audio recordings, websites, and all methods of distributing pornography. The prohibition also applies to erotic arts. In addition, certain types of non-Islamic music and cinema are prohibited. Cloning is also prohibited.

With these areas and prohibitions the question arises that how Islamic Banking can be developed considering needs of 21^st century and its competition. There are two ways in this respect. Ijtihad and Taqleed.

It must be understood that the revelation from Allah Almighty was completed at the time of death of the Prophet Muhammad (PBUH) in the form of Quran and Sunnah.

Ijtihad, however, continues and this is the source or methodology which gives Islamic law, its adaptability to new situations and capacity to tackle all new issues and problems. The primary object is to discover the intention of the Ultimate Lawgiver, Allah Almighty.  To find solution of new legal issues, the term Ijtihad means to derive and deduce religious opinion about some matter that is not mentioned in the sources of Islam, keeping in view the spirit and overall framework of Islam. By ijtihad is meant the exhaustive efforts of a Mujtahid for arriving at presumption in regard to a hukm of the Shari’ah

Ijtihad is validated by the Qur’an, the Sunnah and the dictates of reason (`aql). The Qur’anic verses as ‘And to those who exert we show our path’ (29:69) ‘their affairs are (conducted) by mutual counsel’ and once you have taken a decision, place your trust in Allah. (Surah Aal Imran, 159)

First is the Hadith in which Muadh bin Jabal(r) replied to the Prophet Muhammad (PUBH) that he would resort to Ijtihad, if he does not find a solution in the Quran and the Sunnah and the Prophet Muhammad (PBUH) affirmed him (Narrated by Abu Dawood).

Second is the Hadith in which the Prophet Muhammad (PBUH) said that’ When a judge exercises ijtihad and gives a right judgment, he will have two rewards, but if he errs in his judgment, he will still have earned one reward.’ (Abu Dawud, Sunan) Third is the Hadith in which the Prophet Muhammad (PBUH) said that ‘when I do not receive a revelation I adjudicate among you on the basis of my opinion’ (Abu Dawud,Sunan). There are many examples of how Prophet Muhammad (PBU) used to make a decision on the basis of his ijtihad after consulting with his companions: like in strategies of war and other worldly affairs. Only a jurist (Mujtahid) may practice ijtihad. Requirements of Ijtihad have been laid down by some scholars. Nothing has been mentioned in this regard in the Quran and the Sunnah. Abul Hussain al Basri, laid down for the first time the qualifications of a Mujtahid in the 5th century Hijra which was later accepted by Gazali and other scholars.

The Mujtahid must be a Muslim male or female of sound mind who has attained a high level of intellectual competence. 1) He must be well-versed in the Quran and the Sunnah and related subjects. 2) He must be generally knowledgeable of the Ijtihad carried out by previous scholars. 3) He must know the Maqasid of Shariah (Objectives of Shariah i.e. Protection of 1.Faith, 2.Life, 3. Lineage, 4. Intellect 5.Property). 4) He must be an upright person and must be capable of distinguishing between strong and weak evidence.

Battle of Badr as to what to do with the slaves? Battle of Uhad as to where to fight… Compilation of Quran by Hazrat Abubakar___ Expedition under Usama Bin Zayd_____Jihad against Unbelievers of Zakat…. Decisions of Hazrat Umar(r) Hazrat Usman (r) and Hazrat Ali(r) are the examples of Ijtihad.

Ijtehad is primarily a legislative function, and today the state has a monopoly over legislation through parliament and other institutions. An opinion issued by the Mujtahid would have no significance unless it is accepted by the state. In certain cases, the Mujtahid would be the state and not the individual. In Pakistan, ijtehad can be performed by the opinion of parliament, Courts, Council of Islamic Ideology and other forums.

Generally, Taqleed means following the opinions of the schools of Islamic Law like Hanfi, shafi or Hanbali School of thoughts. The purpose of Taqleed is nothing but to follow the Book and the Sunnah which are obligatory for every Muslim. However, the people are of differing types with regards to understanding and comprehension of Shariah. In a general sense, Taqleed is not permissible as it is explained in following Hadith: Muslim narrates on the authority of ‘Adi bin Hatim that the Prophet (PBU) says about the verse of the Quran, they (Jews) made their ‘Ulama their God instead of Allah (8:31), that they (Jews) did not worship their ‘Ulama rather when their ‘Ulama legitimized something they accepted that as legal and when they forbade that they also accepted that as forbidden. The constitution of Pakistan permits taqleed in articles 189 & 201. These articles make the judgments of the Supreme Court and High Courts binding on courts subordinate to them. Here, Precedents or stare decises are practical forms of Taqleed.

The truth is that Taqleed is allowed for those who cannot search for or understand the evidence, Ibn al-Qayyim also was of this opinion. A scholar is supposed to avoid Taqlid (blind following of another scholar). Taqlid is permissible only for a layman. Shah Wali Ullah was also in this opinion that Taqlid is not permitted for a person who can investigate even some matters. Every educated person should not believe blindly on someone unless he investigates the matter in the light of Shariah.

Hence to make Islamic Banking and Finance truly Islamic along with changes going on Ijtihad is the only way. Islamic Ideology Council with Shariah Boards at SBP, SECP can play main role in resolution of any banking or Financing matter. For this research centers mainly at educational institutions can play supporting role.