Legal aspects of the establishment of the Islamic Law

Abstract

The establishment of the Islamic bank in Malaysia has met along felt desire of the Muslims to practise the rules of the Shariah in the fields of banking and credit operations. This paper deals with the legal background for the establishment of the Islamic bank, touching on both the Islamic Law and the Statutory Law. The philosophy of the Islamic bank is based on the teachings of Islam as contained in the Holy Quran and the Hadith. Among the verses of the Holy Quran which can be referred to are:- (a) "In order that the wealth may not (merely) make a circuit between the wealthy among you. (Surah Al Hashr (59): 7) (b) "There are those who bury gold and silver and spend it not in the way of Allah : announce to them a most grievous penalty.' (Surah Al-Tawbah (9): 34) (c) "And when the prayer is finished, then may you disperse through the land and seek of the Bounty of Allah." (Surah Al-Juma 'ah (62) : 10) (d) "Those who devour riba will not stand except as stands one whom the Evil One has driven to madness. That is because they say "Trade is like riba." But Allah has permitted trade and forbidden riba. Those who after receiving direction from their Lord desist shall be pardoned for the past; their case for Allah to judge but those who repeat the offences are Companions of the Fire: they will abide therein." (Surah Al-Baqarah (2): 275)