HĀJAH IN ISLAMIC FINANCE: MASTERING THE DOCTRINE OF NEED IN SHARĪʿAH DECISION MAKING

Abstract

Islamic financial institutions (IFIs) are compelled to operate in a highly regulated environment without jeopardizing the Sharīʿah governance framework. To deal with arising challenges, Sharīʿah decision-makers sometimes rely on the doctrine of ḥājah (need) as a device to enact a concessionary ruling. However, critiques argue that ḥājah has been used as a pretext to circumvent Islamic commercial law. This paper is an attempt to develop a possible criterion for making a legitimate need based Sharīʿah solution for IFIs. The study is based on qualitative research. Using content analysis, the classical literature of Islamic jurisprudence was reviewed to analyze the concept of ḥājah, its legitimacy, and its Sharīʿah rulings in the perspective of Islamic banking. The research concluded that a Sharīʿah vetted ḥājah can be leveraged by Sharīʿah decision-makers as a tool to address a legitimate challenge faced by individuals or corporations keeping in view the proposed parameters. To substantiate the parameters in the context of Sharīʿah decision-making in Islamic finance, practical examples have been analyzed from the Sharīʿah Standards issued by the Bahrain-based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).