Exemptions and Ideals in Islamic Finance: A Call for Renewal

This paper examines the tension between legal exemptions (rukhṣah) and higher objectives (ʿazīmah and maqāṣid al-shariah) in Islamic finance, arguing that many temporary dispensations have become permanent practices that weaken the industry’s original vision.

It highlights how instruments such as tawarruq, commodity murabaha, contractual “promises,” and credit card structures were initially justified as necessary exceptions but have often deviated from Shariah’s deeper goals of real economic activity, risk-sharing, and social welfare.

While acknowledging that some exemptions such as limited investment allowances in mixed-conventional markets have supported industry growth, the paper argues that many others have led to stagnation and reduced authenticity.

The study identifies three main problems: lack of vision, lack of gradual reform, and lack of innovation, all of which have contributed to a drift away from Shariah objectives.