Maqasid al-Shari'ah and the Solution to Modern Financial Issues: A Research Review of Nejatullah Siddiqi's Views

Abstract

This literature discusses how the Maqasid al-Shari-ah (the superior purposes of Islamic law) can be applied to modern-day financial problems with specific reference to the works of a respected authority on this subject (Dr. Muhammad Nejatullah Siddique). The research emphasizes that the Islamic law does not simply consist of a set of determinations to be applied in all circumstances but it establishes general rules to ensure human wellbeing (maslahah) and to avoid casualty (mafsadah). These are summarized in the 5 fundamental principles of Shari’ah which are: the protection of religion, life, intellect, lineage, and wealth. Financial systems with interests as the primary currency, speculative financial instruments, monetary policy with a base of debt, and sophisticated financial products are highly problematic in the ethical and socio-economic sense in the modern era. To reform such systems, Siddiqi focuses on using the Maqasid al-Shariah that is a dynamic model of ijtihad to analyze and review it. The reason is that according to him, Islamic finance should not be based on legal compliance, but on the attainment of substantive justice, economic stability and fair wealth distribution. The article overview is a criticism of the traditional and certain modern Islamic monetary techniques by Siddiqi (simply put), especially those that imitate the results of interest through products such as tawarruq. He emphasizes that the business should not use financial instruments that lead to the over-debting without contributing to the actual economy. Rather, Siddiqi proposes participatory forms of finance like musharakah and mudarabah, no-interest lending (qard hasan), and transactions based on assets that encourage the division of risks and actual productivity. The paper concludes that the approach of maqasid by Siddiqi offers a holistic and ethically-based alternative to the contemporary financial systems. Maqasid al-Shari‘ah can be applied to the modern economic crisis as a practical remedy to the current situation and an indicator of the further evolution of the true Islamic finance..

Keywords: Maqasid al-Shari‘ah, Islamic Finance, Nejatullah Siddiqi, Interest-Free Banking, Modern Financial Issues