PREDEFINED SHARIAH REQUIREMENTS IN CORE BANKING SYSTEM: A QUALITATIVE STUDY ON MUḌĀRABAH AND MUSHĀRAKAH CONTRACTS

Abstract

The implementation of the core banking system has become an enabler for the business that provides an agile platform to achieve the corporate objective of Islamic banking. One of the challenges for its development is establishing Shariah parameters for each Islamic banking product due to the complexity of its requirements compared to conventional banking products. Thus, this study aims to provide information on ways to establish Shariah requirements based on the authorized Shariah standards such as policy documents issued by the Central Bank of Malaysia dan AAOIFI aside from evaluating the prospect of establishing it as a predefined Shariah requirement that able be translated as parameters in core banking system. A qualitative approach via textual study, legal doctrine, and interviews was undertaken in this study to analyse data related to Shariah contract requirements. This study established predefined Shariah requirements derived from analysis of Shariah requirements under muḍārabah and mushārakah contracts by focussing on the Shariah requirement part of the policy documents issued by the Central Bank of Malaysia aside from comparison analysis conducted on Shariah standards issued by AAOIFI of the similar contracts. It is found that authorized references are vital to ensure the Shariah contract parameters and processes that are translated into the core banking system are in line with resolutions decreed by authorized bodies.