Principles and Practices of Shariah in Islamic Finance
The Principles and Practices of Shariah in Islamic Finance is a collection of a series of reference documents known as the Shariah Parameter Reference. This document is issued by Bank Negara Malaysia (BNM) to further enhance the understanding on the principles and basis of Shariah contracts and to promote standardisation and harmonisation of Islamic financial practices.
This document serves as a standard for Shariah contracts. The principles and practices included in this document aims to achieve the following objectives:
clarify the concepts, principles and conditions of Shariah contracts and practices;
provide focus on the features of Shariah contracts and concepts that form the basis of Islamic financial products and services;
provide the basis for decisions on matters relating to conditions, mechanism and implementation of Shariah contracts or concepts;
facilitate Islamic finance professionals and practitioners in designing and developing Islamic financial products and services; and
facilitate the formulation of policies and guidelines on Shariah contracts and concepts adopted by the Islamic financial services industry.
In general, this document assists users to understand the nature of a particular Shariah contract and practices by understanding the definition, its rationale and purpose.
In ensuring the completeness of the document, BNM had initiated a robust consultation process and conducted research including compiling various fatwas, and incorporating views of several local and foreign Shariah boards. The document was then presented before the Shariah Advisory Council of Bank Negara Malaysia (SAC), before circulating it as a concept paper to the industry, academia and relevant parties including international bodies for feedback and comments.
It is envisioned that The Principles and Practices of Shariah in Islamic Finance will be a useful reference to various stakeholders of Islamic finance such as practitioners, policy makers, scholars, academia, students and consumers. Future series will include principles and practices on jarah, Mudharabah, Musharakah, stisna’ and Wadiah.