Islamic profits through interest payments. (Ahmed, 2010). In Islam

Islamic finance is not
something foreign to the community but studies have found that the modern
Islamic financial system is growing consistently at the national and global
level. The Islamic financial system is essentially a financial system in an
economic system that is based on the principles and values of Islam. Islamic finance is a financing system that based on
Shariah which is Islamic Law. (Ahmed, 2010). There is a lot of importance of islamic finance to individuals such as,
non-interest, financial justice, stability in investments.

Firstly, Islamic finance is
based on non-interest. The main principle of Islamic finance is the prohibition
of interest in all transactions while conventional financing looks forward to
profits through interest payments. (Ahmed, 2010). In Islam there is
only one type of loan called Qardhul Hasan. Which when we borrow RM1000, We
have to repay RM1000. For example, in the contract of Al-Wadiah a contract when
the property owner has entrusted the bank to keep the money for the purpose of
a deposit or loan contract, the bank will not benefit even the bonus money
(hibbah) will be given to depositors at discretion. This will benefit
individuals who want to make loans to avoid high interest rates.

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Besides that, financial
justice is a fundamental requirement that helps the continuous innovation of Islamic
financial products and financial infrastructure in a Shariah-compliant way. The
Islamic economic system promotes justice and balance between individual freedom
and public maslahah. Islamic financing paves the way for business partnerships
or joint ventures. For example, the concept of Musyarakah where a person who
open a partnership business. Profits earned from business sharing will be shared
based on the agreed ratio. While the loss will be incurred by the ratio of
capital contribution, all the risks received are proportionate. Hence the risk
that one individual will face is less because it will be shared between
partners.

In addition, in Islamic
finance it encourages investment. If profits from investing
are high, the overall profits will be divided on both sides based on the ratio
of the partnership because the Islamic finance system sets a higher standard
for investment and it also promotes risk reduction. For example, al-mudharabah
contract is a contract where investors will contribute capital while
entrepreneurs will contribute their energy and expertise. Profit from
investments will be shared between investors and investors based on agreed
sharing ratios. In the event of a loss it will be borne by the financier, while
the entrepreneur will incur losses on his or her effort and energy. Therefore
one should not be afraid to invest in Islamic finance because it has its own
interests for investors.

In conclusion, the Islamic
financial system deserves to stand on the basis of justice and transparency.
Hence, the Islamic financial system needs to empower its position and role
based on Islamic principles that are not burdensome, customer-friendly,
blocking any oppression and becoming a preferred system not only to Muslims but
also to non-Muslims. In addition, Islamic finance has its own importance and
benefits to individuals. All related Islamic finance based on Islamic Law which
avoids any activity in any transaction, conducts business activities based on
the fairness of Shariah law, promising investment stability. Not only for
Muslims but also from other religions should be aware of the importance of
Islamic finance as it benefits the global community: The rules and practices of fiqh muamalat came from the Quran and the
Sunnah, and other secondary sources of Islamic law such as opinions
collectively agreed among Sharia scholars (ijma’), analogy (qiyas) and personal
reasoning (ijtihad).