Fiqh of Transactions Part 08

Understanding AAOIFI's Methodology and Stages in Shariah Standards Preparation

In accordance with the promise made in the previous section, today we will discuss AAOIFI's methodology and stages in Shariah Standards preparation, which are approximately twelve. These stages are part of a rigorous scholarly process, intended to establish Shariah principles and standards for financial transactions by conducting in-depth jurisprudential research. Ultimately, these standards are developed into Shariah standards (المعايير الشرعية).

• Who establishes these standards?

• What is the methodology?

• What are the stages involved in developing these standards?

To clarify, in the initial stages, this organization focused on setting accounting, auditing, and governance standards for Islamic financial institutions. Later, a Shariah committee was formed to address the jurisprudential issues related to various services and products, which included scholars from diverse Islamic jurisprudential schools. Gradually, this committee evolved into a fully-fledged Shariah Board. Hence, AAOIFI itself exemplifies the concept of gradual development and evolution (a concept often lacking in our youth, especially those who aspire to build careers) in response to the needs of financial institutions, establishing itself as a stable organization today.

These standards are called “معاییر” (standards) in Arabic, derived from the concept of something that is used to measure. Since these standards measure whether financial transactions are compliant with Shariah, they are termed s “المعايير الشرعية” (Shariah standards).

Definition of a Standard:

One definition of a standard is دليل عمل ينظم المتطلبات والإجرائات dalil 'amalin yunazzimu al muttalibat walijraat which means a guide or framework that sets the required actions and processes for a subject or key task. In this context, it refers to the legal framework and rules prepared for Islamic banks, established by AAOIFI, and based on which Islamic financial institutions conduct their operations.

AAOIFI has developed approximately 99 standards on regulations, accounting, auditing, ethics, Shariah rulings, and related subjects. Various committees within AAOIFI include scholars, legal experts, lawyers, banking professionals, and judges.

The Process of Developing Shariah Standards in AAOIFI’s Shariah Board:

These standards are the end result of significant effort, divided into multiple stages. They hold immense importance as they guide Islamic financial institutions in conducting their financial operations in accordance with Shariah Rulings. There are approximately 12 stages:

1. Selection of Topic

The selection is based on the specific needs and issues of Islamic financial institutions in the sense of Shariah Rulings relting to those, ensuring the topic's relevance and setting foundational principles for enduring benefit.

2. Approval by the Supervisory Board

The Supervisory Board approves one topic among various proposals.

3. Research and Compilation of Scholarly Articles

Scholars are tasked with conducting detailed research, covering all opinions from classical to contemporary scholars, evaluating differences, and establishing preferred rulings. These detailed articles, prepared for standards, are separately published as 'دراسات المعاییر الشرعیہ' (Studies of Shariah Standards).

4. Second Review Meeting

The compiled articles are presented, summarized, and thoroughly debated. Discussions focus on which opinion is strongest based on evidence and what is suitable according to market requirements. This leads to a preliminary outline of the standard.

5. Preparation of Initial Draft

The initial draft of the standard is prepared, which is open to further amendments.

6. Presentation to a Sub-Committee (المجلس الفرعي)

The draft is presented to a sub-committee, which refines it to give it a formal structure.

7. Review by the Original Scholars

The draft is reviewed by the scholars who contributed to the initial research and articles, ensuring alignment with their research.

8. Public Announcement

The draft is publicly announced to reach all relevant experts, inviting feedback.

9. Public Sessions for Review

Public sessions are held (often online) where experts are invited to provide scholarly and research-based feedback.

10. Collection of Expert Feedback

Scholars and jurists offer their comments and critiques (التنقيحات) on the standard, which are then recorded and presented to the sub-committee.

11. Discussion and Evaluation

The sub-committee discusses the feedback, evaluating its validity and determining solutions for any reasonable scholarly objections.

12. Final Approval and Implementation

The standard is finalized and approved for implementation.

Each stage involves extensive meetings, often spanning several days, with distinguished scholars participating in thorough discussions. It is essential for scholars and the one who want to gain expertise in Fiqh-Al-Muamalat to engage with these drafts, especially those specializing in jurisprudence.

The Majma al-Fiqh al-Islami (International Islamic Fiqh Academy) and Majma al-Fiqh al-Islami India also conduct similar deliberations and issue resolutions on a range of issues faced by the Muslim community, beyond just financial standards.

Scholars and students can access these research articles in Maktaba Shamila under the title مجلة الفقه الإسلامي الدولي (Journal of International Islamic Fiqh). These discussions provide a comprehensive view of jurisprudential research and structured debates. Unlike futile arguments, these discussions are rigorous, ethical, and evidence-based.

Mufti Muhammad Taqi Usmani’s قضايا فقهية معاصرة (Contemporary Fiqh Issues) is also among a series of such resolutions.

With Allah’s assistance, we will, in future sections, delve deeper into understanding these various Shaira Standards In Sha Allah.

Maa Sha Allah, Alhamdulillah, may Allah bless the knowledge and efforts of these scholars, and guide us all. Ameen Ya rabbal aalameen