Sharia
Sharia is the broad body of Islamic norms and law derived from the Qur'an and the Sunnah; in finance it supplies the principles that jurists turn into concrete rules for contracts, ownership, debt and exchange.
Also called: Shariah · Islamic law · Sharia law
Sharia is not a single code that can be looked up section by section. Its sources are the Qur'an and the Sunnah, the recorded practice of the Prophet, and the detailed rules come from fiqh, the jurisprudence that scholars derive from those sources. In commerce that work is done in fiqh al-mu'amalat, and it is there that a bank meets questions such as whether a fee is really disguised riba or whether a contract carries too much gharar.
For an institution, "Sharia-compliant" therefore means compliant with a particular reading of Sharia, usually the one adopted by its Sharia Supervisory Board and, increasingly, the one set by a regulator or a standard-setter such as AAOIFI. Two Islamic banks in different countries can both be compliant while structuring the same product differently.
House style on this site is "Sharia". "Shariah" is kept where it forms part of an institution's official name, such as the Shariah Advisory Council of Bank Negara Malaysia.
In practice
Sharia-compliant does not mean approved by one worldwide authority. There is no single body whose rulings bind every Islamic bank, so compliance always means compliance with a named board, standard or regulator.
Commonly confused with
| Term | How it differs |
|---|---|
| Fiqh | Sharia is the normative framework; fiqh is the human jurisprudence that interprets it into rules. When scholars disagree about a product, they disagree at the level of fiqh. |
See also
- Fiqh al-Mu'amalatFiqh al-mu'amalat is the branch of Islamic jurisprudence that governs transactions between people: sales, leases, partnerships, loans, agency, guarantees, property and the other contracts on which Islamic finance is built.
- Sharia Supervisory BoardA Sharia Supervisory Board is the panel of scholars responsible for reviewing and overseeing an Islamic financial institution's compliance with Sharia — approving products and contracts, issuing rulings and reviewing whether operations follow them.
- FatwaA fatwa is a scholarly legal opinion on a question of Islamic law. In finance it is the ruling — from an individual scholar, an institution's Sharia board or a national authority — that a product, structure or transaction is or is not compliant.
- Maqasid al-ShariaMaqasid al-Sharia are the objectives or purposes of Islamic law — classically, the protection of religion, life, intellect, lineage and property. In finance they are invoked to ask whether a product serves those aims, not just whether its contracts are technically valid.
- HalachaHalacha is the body of Jewish law and legal practice developed from the Torah, Talmud, later legal codes, rabbinic responsa and communal precedent.