Islamic social finance has gained prominence in recent years as an affiliated practice of Islamic finance. This trend seeks to achieve the economic ethics inherent in the principles of Shari‘ah by promoting charitable initiatives among Islamic financial clients as well as providing financial services to the unbankable.
The growing interest in Islamic social finance sheds light on various financial problems faced by the less privileged and on the ways Islamic social finance instruments can help solve these issues. One of the challenges in expanding the scope of Islamic social finance is a lack of research on the Islamic commercial legal issues surrounding the practice. This report aims to initiate a dialogue between Islamic legal experts and industry and market professionals on the roles of Shari‘ah and state law in this field.
The report begins with an examination of the different Islamic social finance instruments available in the market and the principles guiding them. It reviews contemporary Shari‘ah rulings on Islamic social finance as they are used in instruments such as the cash waqf, trusts and zakah. It also considers diversity across jurisdictions in the regulation of Islamic law and finance as they apply to the operation of Islamic social finance institutions.
In its final parts, the report details a range of innovative ideas that will enhance Islamic social finance and that represent the way forward for the industry. It concludes with recommendations for ways governments, financial institutions, international organizations and philanthropic organizations can promote the further development of Islamic social finance.
We hope the report will provide stakeholders a bird’s eye view of Islamic social finance and encourage them to consider and adopt some of its concepts and initiatives to the benefit of the industry.
