FORM OVER SUBSTANCE APPROACH IN ISLAMIC FINANCE DUE TO DARURAH CONCEPT

Abstract

The Islamic finance system is still in its infancy stage. It has a history of around half a century in a different part of the world. Despite remarkable performance in the last two decades this new system is able to capture only 1% of the global financial market approximately. Whereas the counterpart that is the conventional system has a history of 400 years(Richards, 2012). The capitalist system has entered its root in the Muslim and non-Muslim societies. There is lot to be achieved and faced by the Islamic finance system. There are several kinds of criticism on prevailing Islamic finance. One of which is the form over substance approach in Islamic finance resolutions and products. It means that the legal form of the contract is intended to fulfill, and the inherent substance of that particular transaction is compromised(Harasani, 2013; Maurer, 2010; Raza et al., 2012; Shamsudin et al., 2014). One of the arguments given against this criticism is that the state where the Islamic finance system is competing is a situation which falls under the darurah concept.

            In Islamic jurisprudence whenever there is a high degree of inconvenience many impermissible actions are allowed subject to the conditions(Abdul Aziz & Ahmad, 2018). The evidence of this principle can be seen in the verses of Quran as well as in hadees. But the problem is darurah concept is subjective in nature and it is not a black and white decision that can be made by a Shariah scholar. That is why many opinions are found contradicting to each other while deciding that a particular situation is a dire need or not.