The concept of promise in Islamic banking contracts is a novel tool that has been introduced as a result of recent advancements. Wa’d has grown in popularity in recent years because it provides great flexibility. It was primarily developed by Malaysia’s Islamic banks for product structuring. However, there are issues arising from this principle, which is considered to be against Shariah and merely intended to preserve the bank’s interests, which is of course, contrary to Maqasid al-Shariah. The purpose of this study is to look into the significance of the promise concept in Islamic banking contracts, taking into account the maslahah and mafsadah principles recommended in Maqasid al- Shariah. The study uses a qualitative approach as it allows a more in-depth understanding of the subject matter. Data were gathered using published literature and information from the official website of Bank Negara Malaysia (BNM). A semi-structured interview was conducted with three Shariah experts from the Shariah Advisory Council of Bank Negara Malaysia (SACBNM) and two industry practitioners from Bank Islam Malaysia Berhad (BIMB) and Maybank Islamic Berhad (MIB). The data obtained was analysed using the content analysis approach. In sum, the examination of Islamic law sources and discussions with Islamic scholars revealed that the use of the principle of promise in Islamic banking transactions can benefit the micro and macro economy. The concept of promise in Islamic banking contracts can benefit both customers and Islamic banks, particularly in terms of meeting consumer needs, generating profit for Islamic banks, as well as contributing to the country’s development (maqasid kulliyah).
to Al-Masri (2005), Al-Asyqar (1983) and Al-‘Ani, (1988), any kind of promise cannot be used in Islamic banking contracts. They contend that the legally binding promise is the contract itself, and therefore, the presence of riba renders the transaction invalid. Due to the differences in view, the polemic surrounding the concept of promise has had an impact on the mechanism and validity of the permissible Islamic banking contracts such as the Murabahah Purchase Order (MPO), al-Ijarah Thumma al-Bay‘(AITAB) dan Musharakah Mutanaqisah (MM), making the contract controversial and complicated (Nyazee, 2009; Mohamad Sabri et al., 2015). This is because it causes conflict with the Shariah such as riba (Khairul Hafidzi et al., 2017). These criticisms could harm Islamic banking’s reputation and ability to perform Shariah-compliant transactions. If this point of view is not harmonized, it could lead to misunderstandings and misconceptions among practitioners and the community. The failure to handle this idea of promise also raises doubts about the legitimacy of the contracts offered in Islamic banking products (Ginena & Truby, 2013). In Malaysia, the Shariah Advisory Council of BNM is the highest body that governs the operation of the Islamic banking system. The SAC of BNM has published policy documents pertaining to the concept of promise, and this policy came into effect on January 1, 2019 (Bank Negara Malaysia, 2017b). The application of promise in Islamic banking contracts has been made permissible by the SAC of BNM, regardless of the types of promises given. An Islamic Financial Institution (IFI) that uses promise for its products and services must make sure that these products and services adhere to the Shariah criteria as outlined in the policy. As such, the application of promise in the Musyarakah Mutanaqisah contract does not eliminate the element of profit and loss sharing between the contracting parties; a IFIs is not allowed to impose or make payments for any consideration respectively, for the provision of promise including fees or charges. The application of promise in Islamic banking contracts shall be entered into separately and shall be independent from the main contracts (Laila et al., 2021). IFIs can use the policy documents from BNM as guidelines to ensure that promises implemented in Islamic banking contracts are Shariah-compliant. To verify that there is no conflict with the policy, BNM must monitor IFIs that use the promise concept in their products. It is crucial that BNM monitor IFIs in order to prevent Shariah violations and safeguard customers from oppression (Wardhana, 2022).
The promise concept in Islamic banking contracts is a novel tool that has been introduced as a result of recent advancements. Shariah’s flexibility and dynamism allow it to adapt to changes in time and space, particularly in the sphere of muamalah, ensuring that Shariah remains relevant throughout the years. The use of maqasid al-Shariah as a legal determination in addressing current issues is seen as a way to celebrate the benefits (maslahah) of human beings while avoiding harm (mafsadah) to society. The fundamental purposes of wealth circulation, fairness and openness in financial processes, and social justice at the micro and macro levels are all part of the Maqasid al Shariah framework in finance, which leads to the ultimate goal of general human happiness (Zaman et al., 2019). This principle has a wide range of applications in current financial contexts that necessitate flexibility due to changes in time and place (Mohd Awang et al., 2014). The application of promise in Islamic banking contracts has the prospect of being explored in more depth, taking into account the public interest. Therefore, to maintain the robustness of Islamic banking products, the application of promise must be based on the maslahah standard prescribed by Islamic law (Marina et al., 2021). The purpose of this research is to look into the application of the promise concept in Islamic banking contracts in Malaysia from the maslahah perspective. Based on an examination of Islamic law sources and discussions with Islamic scholars, the principle of promise in Islamic banking contracts can benefit both customers and Islamic banks, particularly in terms of meeting consumer needs and generating profit for Islamic banks, as well as contributing to the country’s development. This study is significant in fostering consumer trust and confidence in Islamic banking products by demonstrating how the use of promises in Islamic banking contracts satisfies maslahah requirements. It also helps practitioners develop innovative products using the Islamic principle of promise. METHODOLOGY The study uses a qualitative approach to give a deeper understanding of the subject matter. Data were gathered using published literature and semi-structured interviews. Semi-structured interviews were conducted between 2016 and 2017 and lasted about 30 minutes each. To avoid collecting dropout data, the interviews were recorded on mobile devices. The researcher conducted the interviews in Malay and wrote the transcriptions. The interview questions were more open42 ended and less structured. Some generic questions were prepared first, and all the questions were worded flexibly. It was only after the researcher had conducted interviews with the informants would specific questions be determined. Using this style, the researcher was able to adapt to the current circumstance, the informants’ developing worldview, and fresh perspectives on the subject. Since its widespread implementation across a variety of different Islamic financial products, there are even now, ongoing debates among scholars about the validity of the concept of promise (Marina et al., 2021). Therefore, the content of data interviews still relevant. Interviews were conducted with five interviewees. They were three Shariah experts from the Shariah Advisory Council of Bank Negara Malaysia (SACBNM) and two industry practitioners from Bank Islam Malaysia Berhad (BIMB) and Maybank Islamic Berhad (MIB) who were considered experts in Shariah. They have a solid understanding of Shariah, as well as some knowledge of Islamic finance and related industrial experience. Details about the interviewees are as shown in Table 1. The identities of interviewees have been anonymized to protect their privacy and confidentiality.
| Expert | Gender | Designation | Interview Date |
|---|---|---|---|
| Shariah Expert A | Female Shariah Advisory Council Member | 3/2/2017 | |
| Shariah Expert B | Male Shariah Advisory Council Member | 3/1/2017 | |
| Shariah Expert C | Male Head of Shariah Advisory Council | 16/5/2017 | |
| Practioner Expert A Male | Chief Shariah Officer of Bank Islam Malaysia Berhad (BIMB) | 14/3/2016 | |
| Practioner Expert B Male | The Acting Head Shariah of Maybank Islamic Berhad (MIB) | 9/6/2016 |
The data obtained was analysed using the content analysis approach. The researcher will write the transcription and read it aloud numerous times to get a sense of the entire. After identifying the key ideas through inductive analysis, main themes were created through the synthesis process. The resulting theme, according to Meriam and Tisdell (2016), is the basis for assessing how in the context of the present study, the concept of promise becomes important in Islamic banking transactions.
RESULTS The Promise is a way Out (Makhraj) from Riba and Gharar In Malaysia, Islamic banking operations and services are still imperfect because they operate within the framework of a usury-based economic system. This contrasts with the Islamic countries of the Middle East, such as Egypt, Pakistan, and Iran, which implement legal Islamization systems in all aspects, including the economy, crime, and education (Ahmad Hidayat, 2001). This situation makes it difficult, if not impossible, for Islamic banking to offer Shariah-compliant products (Shariah Expert B, personal interview, Jan 3, 2017) and compete with conventional banking in offering products and services to customers. There is the need to force the use of the promise principle as a way out of strict contractual compliance (Shariah Expert A, personal interview, Feb 3, 2017). As a result, the use of promise in Islamic banking contracts is considered a way out (makhraj syar‘i), as opposed to tricks (hiyal) because the parties seek to avoid narrowness, difficulties, and prohibited elements. Without the principle of promise, it may be difficult for the public to obtain Shariah-compliant products (maslahah hajiyyah) (Azlin Alisa et al., 2014). Furthermore, there is no other alternative that can replace the principle of promise (Shariah Expert A, personal interview, Feb 3, 2017; Shariah Expert B, personal interview, Jan 3, 2017; practioner expert B, personal interview, June 9, 2016). This scenario demonstrates that without the use of the principle of promise, it is difficult for society to obtain Shariah-compliant products, even if they do not endanger human life. Celebrating the common needs of the people (al-hajah al-ammah) corresponds with Maqasid al-Shariah, which aims to alleviate human hardship and complexity (Mohammad Ikhlas, 2017). It enables Islamic banking to perform Shariah-compliant transactions as a way out (makhraj) of riba and gharar transactions while meeting some of the Maqasid al-Shariah requirements with the correct method. As a result, it can prevent more harm than allowing the community to employ conventional banking (practioner expert A, personal interview, Mac 14, 2016). This position is consistent with the legal maxim that when two mafsadah (harms) are in conflict, the bigger harm is safeguarded or avoided by selecting the lesser damage (Al- Suyutī, 1983).
Risk management refers to the forecasting and evaluation of financial and business risks, as well as the identification of procedures and measures to avoid or minimize their potential impact. It is the process t of bearing the risks we want to bear and reducing the risks we do not want to a minimum exposure (Market Business News, n.d.). Risk refers to the forecasting and evaluation of financial and business risks, as awell as the management is a necessary prerequisite for establishing strong and ocedures and measures avoid or minimize their potential is the process resilienttoIslamic banking institution (Bank impact. Negara It Malaysia, 2005). Without promise,theIslamic banks would to exposure a broader ks we want to bear and reducing risks we do not want be to aexposed minimum variety of risks, such as business risks and risks related to the News, n.d.). Risk management is a necessary prerequisite for establishing a keeping strong and managing the Malaysia, actual underlying assets, promise, in addition to financial ic banking institution (Bank Negara 2005). Without Islamic banks risks. On the other hand, through a combination of certain primary to a broader variety of risks, such as business risks and risks related to the keeping Shariah contracts with other ancillary contracts such as promise, actual underlyingit assets, additionbanks to financial risks. specific On the other through the a enablesinIslamic to mitigate riskshand, and achieve rtain primary Shariah contracts withofother ancillary transaction. contracts such principal objectives a particular As as an promise, example,itin anks to mitigate the specific risks and achieve thecontract, principalwithout objectives of a particular Musharakah Mutanaqisah the promise concept, banks Mutanaqisah and customers share the risk the of the venture, hence example, in theIslamic Musharakah contract, without promise concept, bearing risks associated with equity investments. On the other hand, customers share the risk of the venture, hence bearing risks associated with equity a customer’spromise promisetotopurchase purchasethe theasset assetininthe thefuture futureexposes exposesIslamic Islamic e other hand, a customer's banks mostly to credit risk (Bank Negara Malaysia, 2014). edit risk (Bank Negara Malaysia, 2014).
The bank appears to be trying to avoid taking any risks (Mustafa Omar to be trying to avoid taking any risks Omar & Syahidawati, & Syahidawati, 2013)(Mustafa which goes against the Islamic2013) legal which maxim of of ‘al'alghunm thehadith hadith‘al-kharaj ‘al-kharaj lamic legal maxim ghunmbil bilghurm,’ ghurm,' ( )الغنم بالغرمbased on the al-dhaman’ to ‘no risk, no return.’ As a requirement ich refers to 'no bi risk, no return.'which As a refers requirement for profit entitlement, this legal profit entitlement, thisliabilities. legal maxim demands a contracting party contracting partyfor to assume risk and incur Otherwise, supporting contracts to assume risk and incur liabilities. Otherwise, supporting contracts ple of promise applied in Islamic banking contracts is actually an exploitation that such as the principle of promise applied in Islamic banking contracts e interests of theisbank onlyantoexploitation gain variousthat advantages and profits (Nur Zuliana & actually aims to protect the interests of the bank . Customers will,only however, continue to be exposed to a variety of risks. This approach to gain various advantages and profits (Nur Zuliana & Mohd that of traditionalAdib, banking, which tries to maximise profitcontinue at all costs, ignoring client 2011). Customers will, however, to be exposed to a variety of risks.(Ridzwan This approach is not dissimilar to that of traditional sustain the bank's profitability & Azizi, 2009). banking, which tries to maximise profit at all costs, ignoring client welfare in order to sustain bank’s profitability & risks Azizi, ng to Nor Fahimah and Shamsiah (2011) thethe risks found in Islamic (Ridzwan banking are 2009). d because these risks are under human control and are not included in the risks to be e hadith 'al-kharaj bi al-daman'. According to Elgari (2003) this hadith relates to a However, according to Nor Fahimah and Shamsiah (2011) the risks such as risks relating safetybanking of goods commodities, the risk of lossthese of foundtointhe Islamic areorrisks that can benot avoided because risks are under human control and are not included in the risks to be borne based on the hadith ‘al-kharaj bi al-daman’. According to Elgari (2003) this hadith relates to a banking few specific risks suchvarious as risks esent author believes that it is permissible for Islamic to implement res, as long as the instruments used do not violate the Shariah. Binding promise is45 riah (Ahmad Hidayat, 2007). Furthermore, Islamic banks that operate as intermediate il al-sunduk,’ i.e, as trustees, must protect the interest of depositors, who are the main relating to the safety of goods or commodities, not the risk of loss of business. As a result, the present author believes that it is permissible for Islamic banking to implement various risk-control measures, as long as the instruments used do not violate the Shariah. Binding promise is permissible by Shariah (Ahmad Hidayat, 2007). Furthermore, Islamic banks that operate as intermediate institutions or ‘amil al-sunduk,’ i.e, as trustees, must protect the interest of depositors, who are the main contributors to a bank’s fund (92%), while only 8 percent represents stockholders (practioner expert A, personal interview, Mac 14, 2016). As such, risk management is vital for an Islamic bank in order to return depositors’ funds. If Islamic banking becomes vulnerable to danger, depositors are very likely to withdraw their funds and seek alternative options, such as safer and more secure conventional banks. If this occurs, Islamic banking will be unable to grow sustainably, owing to capital constraints and will suffer insolvency. When Islamic banking is unable to withstand adversity, it will undoubtedly harm Muslims by forcing them to engage in usury transactions that are prohibited in Shariah (Muhammad Ramadhan, n.d.). This situation is, of course, contrary to the Maqasid Shariah, which wants both customers and Islamic banks to be protected with the implementation of Islamic banking (Mohd Hafiz, 2016). Producing a Diverse Range of Competitive Products The diversity of products offered by Islamic banking is crucial in meeting the needs of different communities with various types of banking services required (Towpek & Borhan, 2006). Without the promise, there will be a problem with idle funds due to the lack of investment opportunities and financial financing tools (Ab. Mumin & Fadillah, 2006). It has become a major component of the current Islamic financial products to compete with and match the conventional financial products (Khairun Najmi et al., 2012) In fact, almost all Islamic financial products have to rely on promise to make the underlying structures legally binding (Dar, 2003). The widespread application of the principle of promise has undoubtedly helped strengthen the Islamic banking services industry and enhanced product diversification (Jasani & Munawwaruzzaman, 2008) because the promise can produce quality products that meet the needs of society and are comparable to conventional products (Mohd Hafiz, 2016).
Developing New Contracts The diversity of products offered by Islamic banking is crucial in meeting the needs of different communities with various types of banking services required (Towpek & Borhan, 2006). Without the promise, will be aprinciple problem within idleMalaysia funds due to the lack first of investment opportunities financial The there promise was introduced in and early financing tools (Ab. Mumin & Fadillah, 2006). It has become a major component of the current Islamic 2005, when Islamic banking began using products similar to Middle financial products to compete with and match the conventional financial products (Khairun Najmi et countries Gulfproducts Cooperation (GCC), which al.,Eastern 2012) In fact, almost allunder Islamic the financial have to relyCouncil on promise to make the underlying comprises Kuwait, Qatar,application Saudi Arabia and the ofUnited structures legallyBahrain, binding (Dar, 2003). Oman, The widespread of the principle promise has undoubtedly helped strengthen theMunawwaruzzaman, Islamic banking services 2008). industry Acceptance and enhanced of product Arab Emirates (Jasani & diversification (Jasani & Munawwaruzzaman, 2008) because the promise can produce qualityon products Shariah binding promise has reduced Islamic banking’s reliance that meet the needs of society and are comparable to conventional products (Mohd Hafiz, 2016). Bay’ Bithaman Ajil (BBA) contracts, causing controversy as Islamic bankingNew began to diversify Shariah contracts in the structuring of Developing Contracts products. This is as shown in Figure 1.
The promise principle in Malaysia was first introduced in early 2005, when Islamic banking began using products promise, similar to Middle Eastern countries the Gulf Council (GCC), which Without not many Islamicunder banks willCooperation offer new contracts, comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (Jasani & as such Shariah contracts have varying risk profiles. For example, Munawwaruzzaman, 2008). Acceptance of Shariah binding promise has reduced Islamic banking's Murabahah without a promise will cause the bank to be charged reliance on Bay' Bithaman Ajil (BBA) contracts, causing controversy as Islamic banking began to a capital ofcontracts 15 percent due to ofitsproducts. exposure risk diversify Shariah in the structuring This isto as inventory shown in Figure 1. (Bank
Negara Malaysia, 2015). As a result of this situation, Murabahah
Without promise, many Islamic banks(Jasani will offer& newMunawwaruzzaman, contracts, as such Shariah contracts products arenotuncompetitive. 2008). have varying risk profiles. For example, without a promise bank to be charged a On the other hand, withMurabahah a binding promise, it will willcause nottheimpose such capital of 15 percent due to its exposure to inventory risk (Bank Negara Malaysia, 2015). As a result of capital charges on the bank. Similarly, when credit risk is offered this situation, Murabahah products are uncompetitive. (Jasani & Munawwaruzzaman, 2008). On the with a with binding promise, weight a Shariah can be when other hand, a binding promise, itthe will risk not impose suchof capital charges oncontract the bank. Similarly, eliminated. For the AITAB’s riskofweight promise credit risk is offered withexample, a binding promise, the risk weight a Shariahwithout contract can be eliminated. Forisexample, AITAB's riskwith weightpromise, without promise is 187.5 percent with promise, the risk 187.5 the percent and the risk weight is and reduced to 100 weight is reduced to 100Negara percent. (Bank Negara 2015). Malaysia, 2015). percent. (Bank Malaysia,
Figure 1 depicts the composition of financing in Shariah Contracts in Malaysia between 2004 and 2016. There is a significant difference in
Shariah contract financing as the BBA controlled 49.9 percent of the financing in 2004. In contrast, BBAs accounted for only 12 percent of all Shariah contracts in 2016. Enhancing the Development and Competitiveness of Islamic FigureBanking 1 depicts the composition of financing in Shariah Contracts in Malaysia between 2004 and 2016. There is a significant difference in Shariah contract financing as the BBA controlled 49.9 percent of the financing in 2004. In contrast, BBAs accounted 12 percent of all Shariah contracts in 2016. Figure 2 depicts a comparison of for theonly financing markets for conventional and Islamic banking. In 2000, conventional banking controlled 94.7 percent of the local market, while Islamic banking controlled only percent. This isofdue to the unprogressively move Islamic banks Figure5.3 2 depicts a comparison the financing markets for conventional andof Islamic banking. In 2000, as compared to their94.7 conventional banking counterparts in terms of only conventional banking controlled percent of the local market, while Islamic banking controlled 5.3 percent. This is duetechnology, to the unprogressively move of Islamic banks as compared to their conventional innovation, and service; all of which are critical, not banking counterparts in terms ofmarket innovation, technology, but and service; all of which are critical,innot only for defending franchises, also for differentiating a only for defending market franchises, competitive market. but also for differentiating in a competitive market. Enhancing the Development and Competitiveness of Islamic Banking
Source. Bank Negara Malaysia, 2018
Source. Bank Negara Malaysia, 2018
Figure 2 also illustrates the growth of conventional and Islamic banking. It can be clearly seen that over Figure 2 also illustrates of percent, conventional andconsidered Islamicsmall a period of 16 years, the Islamic banking the sectorgrowth grew by 34.9 but this is still when compared the can conventional banking sector, which grewabyperiod 65.1 percent. former’sthe growth banking.to It be clearly seen that over of 16Theyears, was due to Islamic banks’ increasing product by innovation product but launches, provided Islamic banking sector grew 34.9 and percent, thiswhich is still consumers with a broader range of financing to options that were previously unavailable. considered small when compared the conventional banking sector, This development has allowed Islamic banking to continue to grow and compete effectively with which grew by 65.1 percent. The former’s growth was due to Islamic conventional banking (Stubing, 2017). The marked change in the Islamic banking sector demonstrates innovation product launches, how itsbanks’ diversityincreasing of competitiveproduct and innovative products areand critical to the sector’s positive which development provided consumers with a broader range of financing options that and that they complement the financial products offered by conventional banking (Bank Negara Malaysia, 2018). were previously unavailable. This development has allowed Islamic banking to continue to grow and compete effectively with conventional banking (Stubing, 2017). The marked change in the Islamic banking sector demonstrates how its diversity competitive innovative Shariah-compliant financial solutions offered by theofIslamic banking and industry (including Meeting the Economic Needs of the Nation and Society by development financial institutions), continued to support the diverse needs of the economy in 2017, (Bank 48 Negara Malaysia, 2018) especially through financing activities such retail financing, business financing and corporate financing. Islamic banking financing is essential to investors and individuals products are critical to the sector’s positive development and that they complement the financial products offered by conventional banking (Bank Negara Malaysia, 2018). Meeting the Economic Needs of the Nation and Society Shariah-compliant financial solutions offered by the Islamic banking industry (including by development financial institutions), continued to support the diverse needs of the economy in 2017, (Bank Negara Malaysia, 2018) especially through financing activities such retail financing, business financing and corporate financing. Islamic banking financing is essential to investors and individuals for wealth creation, capital income, and enjoyment of various amenities and goods such as houses and cars that are unlikely to be available through their own proceeds due to a lack of cash. for wealth creation, capital income, and enjoyment of various amenities and goods such as houses and cars that are Figure 3 unlikely to be available through their own proceeds due to a lack of cash.
2018 from 2016 until 2017, in which Islamic financing grew
by 9.4 percent to RM605.5 billion (2016: 11.8%). Islamic business financing continued to increase at a positive growth of 7.8the percent (2016: 12.2%), mostly infinancing the banking, insurance, and business Figure 3 shows growth of Islamic from 2016 untilservices 2017, and manufacturing sectors. Business financing was driven by small and medium enterprises (SMEs), inwhich which Islamic financing grew by 9.4 percent to RM605.5 billion grew by 12.5 percent (2016: 13.3%). In addition, Islamic house financing continues to increase (2016: Islamic business continued at a strong11.8%). growth of 17.5 percent (2016: 16.3%) financing (Bank Negara Malaysia, 2018).to increase at a positive growth of 7.8 percent (2016: 12.2%), mostly in the banking, The increase in funding is indirectly related to the promise principle since it makes a product affordable, insurance, and business services and manufacturing sectors. Business not cumbersome, and buyers are not subject to tight approval criteria (Jasani & Munawwaruzzaman, financing driven by small medium (SMEs), 2008) such as was collateral, hamish jidiyah, or otherand restrictions (Jasani &enterprises Munawwaruzzaman, 2008), which makes approval to be (2016: a long and difficult process (Shariah Expert C, personal which grewfinancing by 12.5 percent 13.3%). In addition, Islamic house interview, May 16, 2017). When promise risks shifted the accountability of the Islamic bank to a financing continues to increase at a strong growth of 17.5 percent customer, it caused customers to bear a wider variety of risks and this was compensated by a reduced (2016: 16.3%) Malaysia, 2018). price for the financing(Bank obtained Negara (Bank Negara Malaysia, 2014). This increase study has found the practice of the concept related of promiseto canthe aid wealth formation (wealth The in that funding is indirectly promise principle growth) by making it easier for clients to get financing for basic requirement assets such as houses since it makes a Khairul product affordable, not cumbersome, and buyersinitial are (daruriyyat) (Fakhri & Anuar, 2018). While business financing assists them in obtaining capital to establish a business, purchasing raw materials, paying salaries, and acquiring assets to expand the company, job possibilities are also created, which can contribute to the community's source of funding. Plus, the funding offered can help with wealth creation and growth (tanmiyyah) and ensure that their level of living improves.
not subject to tight approval criteria (Jasani & Munawwaruzzaman, 2008) such as collateral, hamish jidiyah, or other restrictions (Jasani & Munawwaruzzaman, 2008), which makes financing approval to be a long and difficult process (Shariah Expert C, personal interview, May 16, 2017). When promise risks shifted the accountability of the Islamic bank to a customer, it caused customers to bear a wider variety of risks and this was compensated by a reduced price for the financing obtained (Bank Negara Malaysia, 2014). This study has found that the practice of the concept of promise can aid wealth formation (wealth growth) by making it easier for clients to get financing for basic requirement assets such as houses (daruriyyat) (Fakhri & Khairul Anuar, 2018). While business financing assists them in obtaining initial capital to establish a business, purchasing raw materials, paying salaries, and acquiring assets to expand the company, job possibilities are also created, which can contribute to the community’s source of funding. Plus, the funding offered can help with wealth creation and growth (tanmiyyah) and ensure that their level of living improves. At the same time, some of the expectations placed on Islamic banking are unrealistic, particularly when considering that the goal of Islamic banking is to make and achieve as much profit as possible, as opposed to social responsibility; it is not at all concerned with the development of the economy or the welfare of society (Mustafa Omar & Syahidawati, 2013). The reasoning, according to my point of view, is unjustified and unsound. Eradicating poverty and other social responsibilities are all important goals of an Islamic economic system and not the primary aim of the Islamic banking system. According to Al-Amine (2015), poverty will not be erased and social justice will not be achieved unless Islamic economic concepts are completely followed, as well as Islamic principles and values. Expecting Islamic finance to eliminate poverty in the current environment is unrealistic, and it may be founded on a misunderstanding of the Maqasid al-Shariah. Yet, Islamic finance can help achieve that goal, but it will only play a secondary role. According to Shinkafi and Nor Aini (2018) zakat and waqf have the primary responsibility of promoting the welfare and growth of the community. In this scenario, the author of the present paper believes that it is critical to take a closer look and try to understand that Islamic banking is a business, not a philanthropic institution. Making a profit in business is acceptable as long as it is not earned through unethical methods such as usury, fraud, or ghabn (Shamsiah, 2013). Profit is significant not only because it can stimulate and encourage investment, shift the use of output resources to the optimal level, and lead to efficiency, but also because it can stimulate and encourage investment, move the use of output resources to the optimal level, and lead to efficiency (Towpek & Borhan, 2006). The profits earned will enable Islamic banking to fulfil its social responsibility of contributing to the development of society’s socioeconomic system. Islamic banking is one of the most significant contributors to the growth of zakat funds in the country. Various activities can be carried out through the zakat fund that can contribute to one’s comfort and well-being in life and help improve the socioeconomic status of the asnaf, as well as contribute to the development of the ummah (Bank Islam, 2018; Mohd Iskandar, 2020). As a result, the principle of promise should not be viewed solely through the perspective of jurisprudence, but also through the viewpoint of kulliyah al-kubra in maqasid, where the promise not only aims to strengthen a contract or agreement, but also to contribute to the variety of services provided to customers and to the economic development of the local community and the country as a whole (Shariah Expert C, personal interview, May 16, 2017). CONCLUSION In conclusion, from a Shariah perspective, the use of the principle of promise in Islamic banking transactions can benefit the micro and macro economy. The maslahah approach to promise in Islamic banking contracts must be investigated and viewed not only from a fiqh perspective, but also from the nature of the business, which must be competitive, profitable, and viable in the long-term. It is essential in this sense to take into account the maslahah and mafsadah principles when evaluating any good or service provided in order to ensure that the development made in this system complies with both modern needs and demands, as well as the legal standards of Islam. Without the application of the principle of promise, customers are having trouble obtaining finance for necessities of life like housing, because banking products are pricey and subject to tight financing approval requirements. In addition, the cost of Islamic banking products and services, as well as the lack of a wide range of products available to customers, will make it difficult for banks to compete with conventional banks. It is because of this constraint that it is challenging for Islamic banking to remain in business when its products and services are not in demand. As the result, the concept of maslahah is primarily implemented in the application of promise in Islamic banking contracts because the promise benefits not only the individuals but also the bank, which eventually contribute to the wellbeing of society and the country (maqasid kulliyah).
This research did not receive any specific grant from any funding agency in the public, commercial, or not-for profit sectors.