A rereading of the fundamentals of Islamic finance: principles of Contract law, Riba and Gharrar in light of the Maqasid Al Sharia and Maslaha principle’

The paper argues that in light of the growing significance and expansion of the Islamic finance industry, the arguments surrounding the ‘substance’ versus ‘form’ debate have become increasingly important. One of the major reasons for this debate has been the expansion of Islamic finance as an industry into jurisdictions that don’t recognize sharia as a valid source of law, which leaves the IFI’s (Islamic financial Institutions) as unregulated and unsupervised. The paper argues that to counter this particular issue, there is a need of rereading the fundamental working blocks (the law of contracts, ban on Riba and Gharrar) of Islamic finance in light of the interpretive and jurisprudential rules of Maqasid al sharia and Maslaha so that these three fundamentals can be used to ensure that the industry remains true to its basic essence (substance) as well as ‘form’.