Operationalizing Higher Ethical Objectives: Piety, Ethics, and Institutional Practice in Pakistan’s Islamic Financial Sector

Abstract

As a developing and evolving phenomenon, Islamic finance is continuously questioned regarding its performance and efficiency, especially in the context of higher ethical objectives, also termed as maqasid al Shariah, to achieve falah by practicing ihsan. A vast group of researchers has measured the unsatisfactory performance of Islamic financial institutions against the maqasid al Shariah, reflecting their convergence with capitalist systems. This raises a question of whether the Islamic finance industry interprets the concept of maqasid al Shariah the same way as academia and whether they assign maqasid al Shariah the same high level of relevance and importance. This study explores how the practitioners of the Islamic banking industry in Pakistan understands and implement maqasid al Shariah in practice. Adopting a qualitative, multiple-case approach, it draws on 20 in-depth narrative interviews with Islamic bankers and Shariah scholars. The findings of the research suggest ten different perspectives of practitioners, which they hold regarding maqasid al Shariah. They are (1) public welfare (maslahah), (2) business motives alongside banks do not consider maqasid al Shariah as their responsibility, (3) wrong interpretation and wrong evaluation of Islamic institutions on maqasid, (4) new industry and over expectation from the industry, (5) justice/equity (‘adl/ihsan), (6) bankers consider auto inclusion of maqasid al Shariah in every transaction, (7) prevention from prohibitions and provisioning of halal options, (8) Shariah compliance, (9) more focus on protection of wealth (10) maqasid are not divine and are man-made interpretations. These findings contribute to developing more effective performance measurement frameworks for the industry in the future and can compel both regulators and practitioners to consider comprehensive objectives of Shariah in product development rather than focusing merely on compliance.

1. Introduction

Development is increasingly recognized as a multidimensional process that extends beyond economic growth to include cultural, ethical, and institutional factors. Within this broader framework, Asutay (2013) extends Islamic moral economy (IME) as an alternative paradigm that emphasizes the integration of faith, ethics, and socio-economic justice. Unlike the secular paradigm, which has historically prioritized material growth and GDP-based indicators, the Islamic perspective of development is rooted in the maqasid al Shariah, seeking to secure human well-being (falah) in both material and spiritual dimensions.

The very emergence of Islamic moral economy was premised on Islam’s stance against injustice, inequality, and exploitation (Tarigan et al. 2021). It aims to position faith-based principles as guiding mechanisms for equitable distribution, social justice, and comprehensive human development (Asutay 2013). The maqasid al Shariah framework, originally theorized by al-Shāṭibī (d. 790 AH/1388 CE), argues that the Shariah is instituted to realize human welfare (al-Shāṭibī 2003), including preservation of faith, life, intellect, progeny, and wealth. Furthermore, values such as ihsan (benevolence) and maslahah (public welfare) underpin this approach. However, while Islamic finance has grown rapidly worldwide, it has been criticized for replicating conventional banking models without adequately addressing the developmentalist and social justice aspirations of Islamic economics (Chapra 2007).

Justice (‘adl) and equity are central in the Quranic discourse of mu‘amalat (human-to-human relations) (Quran 17:70), and Islamic institutions are expected to operationalize these through practical mechanisms. Instruments such as zakah, awqaf, qard al-hasan, and Islamic microfinance hold significant potential to empower communities, redistribute wealth, and align financial practices with developmental goals (Dirie et al., 2023 ). Yet, despite these ethical imperatives, Mouna (2025) notices that the industry’s performance in fulfilling maqasid remains contested, with academia often pointing to a divergence between normative aspirations and industry practices.

This study seeks to contribute to this debate by examining how Islamic banking practitioners in Pakistan interpret and operationalize maqasid al Shariah. By foregoing practitioners’ perspectives, often overlooked in academic discourse, this research highlights the tensions between business motives, regulatory compliance, and the ethical aspirations of IME. In doing so, it provides insights into how maqasid can be institutionalized within Islamic finance to ensure that piety, justice, and ethical values remain central to financial and developmental practices.

To gain deeper insight into this research problem, we further classify them into research questions.

• How do practitioners believe Islamic financial institutions are guided to achieve maqasid al Shariah?
• What are the constructs for operationalization of maqasid al Shariah at the level of industry?

2. Theoretical Background

The word maqasid is the plural of maqsad, which means intent, objective, purpose, or goal. The objectives of Islamic law are the reasons why it was revealed by the Sole and Supreme Creator to humanity. The objective of the Shariah is to benefit humanity both in this world and in the Hereafter. Allah wants humanity to lead a life in this world that is beneficial to oneself and to society. As mentioned in the Holy Quran, Allah says, “We have not sent you but as a Mercy to the worlds” (21:107), which means that the Quran highlights mercy as the most significant endeavor of the Prophethood of Muhammad (PBUH). This can also be noted in the Quran’s characterization of itself as “a healing to the (spiritual) ailments of the hearts” and “a Guidance and Mercy” for the believers and humanity (10:57). Muslim scholars have, thus, considered Mercy to be the all-pervasive objective of the Shariah, which is regarded as in all intents and purposes as implying the realization of benefit or public interest (maslahah).

Maqasid al Shariah provides a foundational framework for understanding the underlying values, purposes, and wisdom embedded within Islamic legal rulings (Asutay 2013). Rather than viewing Shariah as a collection of isolated ethical commandments, this theory highlights its broader objectives of maintaining societal order and promoting human well-being. These objectives, as explained by Chapra (2007), have either been explicitly stated in the Quran and the Sunnah or have been inferred from them by several scholars. The primary sources from which these objectives have been derived are the Quran and the Sunnah, in which certain objectives are clearly explained, while others are inferred utilizing juristic reasoning and interpretive methods (Yusuf 2020). The Quran clearly articulates broader, higher objectives such as justice, mercy, moral guidance, and the removal of hardship, signifying the purposive nature of Shariah. Later, classical jurists employed inductive reasoning to infer more specific objectives by examining recurring patterns across Quranic verses and the authentic Hadith of the Prophet. Through this process, scholars identified the protection of essential human interests, such as religion, life, intellect, lineage, and property, and organized them into a structured maqasid framework (Yusuf 2020).

This theoretical background aims to trace the intellectual development of maqasid al-Shariah. Beginning with the foundation of maqasid in the Quran and the Sunnah, followed by an examination of early juristic formulations and the subsequent systematization undertaken by classical scholars. The discussion then highlights variations across legal schools and the historical development of the concept, before concluding with contemporary interpretations and ongoing scholarly debates that shape modern application of the theory.

2.1. Foundations of Maqasid al Shariah

The foundations of maqasid al Shariah rest on the primary sources of Islamic law, which are the Quran and the Sunnah. The concept was not initially articulated as a distinct theory, but evolved gradually over time, as in the Quran and the Sunnah, legal injunctions are stated with clear social, moral, and ethical purposes, which indicates that the creator did not merely reveal these injunctions as a random set of rules, but as a means to realize human welfare and prevent harm. Such foundational verses in the Quran and Sunnah, and practices emphasize values such as mercy, justice, ease, and balance. Later, Islamic scholars and jurists recognized these noble values as the higher objectives of Islamic Law.

During the time of the Holy Prophet, the divine guidance was applied in a context-sensitive and purposive manner. In particular, as noted by Afzal and Khubaib (2021), when imposing punishments for crimes, the Holy Prophet (PBUH) took into account factors such as criminal’s nationality, personal circumstances, financial stature, and status. Thus, the Hudood of Allah would be established, and the criminal would still have a path to correct themselves and seek forgiveness. This approach entails an implicit recognition of the maqasid al Shariah underlying legal rulings, in which the recognition of benefit and the avoidance of hardship were prioritized. Consequently, Islamic law functioned as a living and responsive system that aimed to guide human conduct toward moral and social well-being.

Following the Prophet’s passing, legal judgments often reflected considerations of public interest, prevention of harm, and necessity, particularly in circumstances where the literal execution of a legal ruling could undermine its intended purpose. The companions of the Holy Prophet continued to apply Islamic rulings with a strong awareness of their underlying objectives.

A significant factor that sparked Muslim scholars’ interest in developing such a framework of maqasid al Shariah was their observation, in the Quran and Sunnah, of numerous texts and indications that Shariah is goal-oriented or purposeful. For example, these verses of the Quran assert the purposive nature of divine injunctions.

Allah says, “And in no way did We create the heaven and the earth and whatever is between them as playing.” (21:16). In another place in the same chapter of the Quran, Allah says, “Allah intends for you ease and does not intend for you hardship and [wants] for you to complete the period and to glorify Allah for that [to] which He has guided you; and perhaps you will be grateful.” (2:185).

2.2. Classical Era

Al Ghazali (d. 505/1111), the eleventh-century renowned Islamic philosopher, jurist, and scholar, studied maqasid under the title “Evidence of istislāh”, which serves as a method for issuing rulings based on maslahah mursalah; a subtype of maslahah signifying benefits that are neither explicitly approved nor forbidden by Shariah (Al Ghazālī 1992). Al Ghazali explains that the primary objective of Shariah is to promote the well-being of people by protecting five essential interests: faith (dīn), life (nafs), intellect (‘aql), posterity (nasl), and wealth (māl). Any measure that safeguards these five elements serve the public interest and is desirable, whereas anything that harms them is against public interest and their removal is desirable (Al Ghazālī 1992; see also Chapra 2007).

Many Islamic scholars have examined the objectives of Islamic law, or maqasid al Shariah, throughout history, as detailed in

Table 1. Classical scholars.

Scholar	Era	Significance	Main Contribution
Imam al-Juwayni	d. (478). AH/1085 CE	Presented purposive reasoning and public interest (maṣlaḥah).	Provision of early foundations for maqasid reasoning.
Abu Hamid al-Ghazali	d. (505). AH/1111 CE	Framed the five essential objectives of Shariah.	Systematized maqasid within uṣūl al-fiqh.
Fakhr al-Din al-Razi	d. (606). AH/1209 CE	Extended rational inquiry into legal objectives.	Improved theoretical rigor of maqasid discourse.
Najm al-Din al-Tufi	d. (716). AH/1316 CE	Ordered maṣlaḥah in socio-legal matters.	Presented flexibility in legal application.
Ibn Taymiyyah	d. (728). AH/1328 CE	Highlighted justice, intent, and public welfare.	Connected maqasid with ethical realism.
Ibn Qayyim al-Jawziyya	d. (751). AH/1350 CE	Asserted Shariah aims at justice and mercy.	Ethical framing of maqasid principles.
Al Shatibi	d. (790). AH/1388 CE	Arranged maqasid into hierarchical categories.	Recognized maqasid as an independent methodology.

. While Imam Al Ghazali is highly respected, many other scholars have made significant contributions to the study of maqasid al Shariah.

Scholar, jurist, and reformist Muhammad al-Tahir Ibn Ashur (1879–1973) was a well-known Islamic figure in Tunisia. His work on maqasid al Shariah has been a significant contribution to Islamic jurisprudence. The classic work in this field by Ibn Ashur is “maqasid al Shariah al-Islamiyyah” (The Objectives of Islamic Law). Emphasizing the importance of understanding and implementing the broader objectives and underlying intentions of legal decisions, rather than focusing solely on the particular legal rulings themselves, he aimed to revive the Islamic legal heritage in this work.

Islamic scholar Ibn Taymiyyah (1263–1328) is well-known for his substantial contributions to theology, philosophy, and jurisprudence. Ibn Taymiyyah emphasized the Quran and the Sunnah (nas). He frequently took a literal, straightforward approach, attempting to draw legal conclusions straight from the written sources. Ibn Taymiyyah’s theories had a great influence on Ibn Qayyim al-Jawziyya (1292–1350), a medieval Islamic scholar and jurist who lived in the same era as Ibn Taymiyyah. He stressed the importance of intention in Islamic actions. He emphasized the need to act with a true and honest intention, which is connected to the idea of maqasid al Shariah. He explored the concept of maslahah (public interest) in Islamic law.

al-Shāṭibī (2003) also affirms these maqasid, which were initially introduced by Al Ghazali. He insists that these are not the only maqasid one should be concerned about, but that there are many others indicated by the Quran and Sunnah or inferred from them by scholars. He classifies these as the primary ones (al-asliyyah) and the others as the corollaries (tabiah). The realization of these secondary goals is also important because they contribute to the achievement of the primary goals. The corollaries continue to expand and change over time.

Al Shatibi highlighted the relationship between maqasid al Shariah and the fundamental concepts of Islamic jurisprudence, known as Usul al-Fiqh. He asserted that in determining legal verdicts, jurists should take into account the higher goals of Shariah and base their interpretation and application of the law on maqasid. The richness inherent in the teachings of the Quran and Sunnah should enable us to expand and refine the corollaries as needed to ensure that all human rights are duly honored and that all human needs are adequately fulfilled. Bedoui (2012) assumes that the objectives should be balanced and therefore they should carry equal weight.

Preservation of the maqasid al Shariah, either stated by Imam Al Ghazali or other Shariah scholars, should not be treated as a static concept. These should be continuously enriched through a positive movement; it may not be possible to safeguard them and sustain the societal well-being in the long run. Times have changed, and needs have also changed and multiplied, so it is important to discuss the maqasid within the context of contemporary realities.

The role of Islamic financial institutions in society and the Islamic concept of development, grounded in the maqasid al Shariah, is a significant nexus and cannot be ignored (Jan et al. 2018). The approach’s strength lies not in its emphasis on all-encompassing yet modest material advancement, but also in the appropriate place it gives to faith, spirituality, and moral ethics as catalysts for sustained and moderate development.

Maqasid are the divine intent and moral principles upon which the Islamic law is based. These concepts include, but are not limited to, justice (‘adl), human dignity, free will, magnanimity, chastity, facilitation, and social cooperation (Jan et al. 2018). It serves as a bridge between Islamic law and modern notions of human rights and development (Jan and Asutay 2019; Siddiqi et al. 2019; Auda 2008b).

Maqasid can also be understood as the good ends the laws want to achieve by either blocking or opening certain means. So, the maqasid of ‘preserving the minds and souls of the people’ explains the ban on alcohol and intoxicants. The maqasid of protecting people’s property and honor give a rationale for the death penalty as a possible punishment for rape or genocide.

Maqasid are the objectives, principles, intent, goals, and ends behind the Islamic rulings (Nouman et al. 2021; Auda 2008a). A few of the Islamic theorists believe them to be an alternative expression to ‘people’s interests’ (masalih). Various Jurists have further developed the concept of masalih and added dimensions to the maqasid al Shariah, such as Abd al-Malik al-Juwayani (d. 478 AH/1185 CE), who used maqasid al Shariah and public interest interchangeably. Al Ghazali (505 AH/1111 CE) placed maqasid under what he called ‘unrestricted interests’ (al-masalih al-mursalah). Fakhar al Din-al-Razi (606 AH/1209 CE) and Al-Amidi (631 AH/1234 CE) also followed his classifications. Najm al-Din al-Tufi (716 AH/1316CE) defined maslahah as ‘which fulfills the purpose of the legislator’.

Al Qarafi (1285AH/1868 CE) has linked both maqasid and maslahah by a fundamental rule (usuli): a purpose (maqsad) is not valid unless it leads to the fulfillment of some good (maslahah) or the avoidance of some mischief (mafsadah). A maqsad in Islamic law is there for the ‘interest of humanity’.

Traditional classification divides the maqasid into three levels: necessities (darurat), needs (hajiyat), and luxuries (tahsiniyat). Necessities are further divided into what preserves one’s faith, soul, wealth, mind, and offspring. The preservation of honor is another addition by some jurists. These are the essentials for human life itself. This is one of the reasons behind the prohibition of alcohol and intoxicants in Islam. Islam is also against all types of usury, monopolies, fraud, and corruption in any of its kinds and forms since all these financial activities may create harm to human life.

Similarly, Islam places great importance on the preservation of offspring as it contributes to family culture and the fabric of society. If offspring receive proper education and attention, and emphasis is placed on their moral and ethical upbringing, it will eventually give rise to a society that cares more about morality, ethics, and justice. Finally, the protection of faith is also a necessity for human beings; although related to the life hereafter, the preservation of faith is of utmost importance to an individual’s life. For any revealed law, the preservation of these necessities is a must.

Needs lie at a lower degree of importance than necessities. Needs are something that are not mandatory for the survival of the human being. A good example of these would be the need to marry or travel. It is up to the individual whether to marry or travel. There is no threat to his life if he does not marry, but it can create moral issues in society. However, they move a level up to necessity when the lack of their needs becomes widespread. One of the fundamental rules in Islamic law states: “A need that is widespread should be treated as a necessity” (Nouman et al. 2021; Auda 2008a).

Purposes at the level of luxuries are related to the beautification of life. These are the things that are encouraged by Islam only to further praise Allah’s mercy and generosity toward human beings. It may include perfumes, beautiful homes, and stylish clothing. It should be kept in mind that these purposes should have a low priority in one’s life.

It is important to note that each level should serve the level below, reflecting the interconnectedness and overlap with the other levels. For example, both trade and marriage, at the level of needs, are related to the necessities of preserving wealth and offspring. Furthermore, the absence or lack of one item from a level moves it to the next level above. For example, if trade at the level of needs is unavailable, leading to an economic recession, it then moves up to the level of necessities because they become more important for human survival. One can relate the purposes of Islamic law to those of Maslow’s ‘hierarchy of needs’. Maslow proposed a five-level hierarchy of needs in 1943, ranging from physiological needs to a final level of self-actualization, and later revised it in 1970 to a seven-level hierarchy. The similarity between Al Shatibi’s and Maslow’s theories lies in the levels of goals. The second version of Maslow’s hierarchy of needs proposes another interesting idea: the evolution of these needs over time.

In a technical sense, maqasid al Shariah refers to the wisdoms that God highlighted in his rulings (Al-Yūbī 1998). In other words, Shariah rulings are purposive, which means they are revealed for a specific purpose. As God declares Himself as al-Hakim (the all-wise), His rulings should reflect His omniscience. Therefore, to glorify the character of al-Hakim, it should be promoted that Islamic rulings are revealed for humankind full of wisdom (Hamīdān 2004).

Maqasid al Shariah is closely related to another term: maslahah. In more detail, maqasid al-Shariah aims to realize the element of maslahah through the implementation of Shariah rulings. This term was first defined by Al Ghazali, as protecting five essential elements in life, including din (religion), nafs (soul), aql (intellect), nasab (progeny), and maal (property) (Al Ghazālī 1992). Later, Al-Shatibi explained that maslahah reflects the core of human life, in achieving their livelihood and gaining the quality of emotion and intellect, which require them to be in an absolute sense (al-Shāṭibī 2003). Ibnu Ashur, a contemporary scholar, describes maslahah as an attribute of an action that promotes the good, in which it benefits the public or individuals. In contrast, mafsadah is an attribute of an action that may lead to corruption or harm towards the public or individual (Al-Ashūr 2001).

Islamic theories of maqasid have evolved over time. This evolution occurred over centuries, particularly in the twentieth century, in response to critiques raised by contemporary theorists regarding the traditional classification of necessities (Jan 2013). One criticism argued is that the traditional maqasid focuses primarily on individuals rather than society as a whole. It is also criticized that these maqasid do not sufficiently emphasize justice and freedom. It has also been argued that traditional maqasid are largely derived from Islamic legal heritage, and they only and always refer to the rulings of the Islamic law provided by different Islamic schools of law rather than referring to the original scripts of Islam, i.e., the Quran and Hadith, for the bases of these maqasid.

The classical view of maqasid al Shariah is also criticized for lacking the flexibility needed to address contemporary issues and challenges and for its rigidity. It has been argued that the traditional interpretation of maqasid al Shariah is overly reliant on ancient Islamic scholarship, often overlooking modern methods and insights from fields like political science, sociology, economics, and psychology. Its limited scope may make it less effective in addressing contemporary issues. Another critique is that the classical interpretation of maqasid al Shariah prioritizes communal benefits over individual rights, which some scholars argue could result in violations of individuals’ rights and private liberty, including gender equality and social justice. Table 1 summarizes the classical scholars and their main contributions to maqasid theory.

2.3. Contemporary Research

In light of these shortcomings, contemporary scholars sought to add new dimensions to the context and, based on the scope of the rulings they cover, further divided the maqasid into three levels, as shown in

Table 2. Contemporary scholars.

Scholar	Era	Main Contribution	Relevance
Muhammad al-Tahir Ibn Ashur	1879–1973	Extended maqasid to include freedom and human dignity.	Chains societal and institutional development.
Rashid Rida	1865–1935	Linked maqasid with reform and renewal.	Appropriate to governance and regulatory reform.
Muhammad al-Ghazali	1917–1996	Highlighted ethical revival and justice.	Reinforces normative ethical foundations.
Yusuf al-Qaradawi	1926–2022	Expressed universal maqasid and human rights.	Lines up Shariah with human development goals.
Taha Jabir al-Alwani	1935–2016	Proposed civilizational level maqasid.	Strategic framework for Islamic institutions.
Jasser Auda	Contemporary	Presented systems-based maqasid analysis.	Valuable for institutional and performance evaluation.
Monzer Kahf	Contemporary	Presented systems-based maqasid analysis.	Direct application to Islamic banking outcomes.

. These include general, specific, and partial maqasid (Nouman et al. 2024). General maqasid are observed throughout Islamic law, including necessities, needs, and newly proposed ideas of justice, universality, and facilitation. Specific maqasid are those implemented within certain chapters of Islamic law and include the welfare of children in family law, the prevention of crime in criminal law, and the prevention of monopolies in financial transactions. Partial maqasid are the intents behind specific scripture texts or rulings, such as seeking the truth by obtaining several witnesses in a court case or allowing an ill or fasting person to break their fast to reduce hardship.

To address criticism regarding the individualist nature of maqasid, they have been expanded to encompass humanity as a whole. Ibn Ashur prioritized the maqasid of the Ummah over those of the individuals. Rashid Rida included ‘reform’ and ‘women’s rights’ while Yusuf-al-Qaradawi included ‘human dignity and rights’ in their theories of maqasid. Al Tahir ibn Ashur viewed that the main purpose of the Islamic law is to maintain “order, equality, freedom, facilitation and the protection of pure natural disposition (fitrah)”. Muhammad Al Ghazali emphasized the factors of justice and freedom (Jan 2013).

Yusuf al Qaradawi (1999, pp. 7–8), after surveying the Quran, stated the following universal Maqasid: “preserving true faith, maintaining human dignity and rights, calling people to worship God, purifying the soul, restoring moral values, building good families, treating women fairly, building a strong Islamic nation, and calling for a cooperative world.” Taha al-Alwani also reviewed the Quran and identified three of its most supreme and prevailing maqasid: the oneness of God, purification of the soul, and the development of civilization on earth.

Auda (2011, p. 199) describes maqasid’s structure as “a multidimensional structure, in which levels of necessity, scope of rulings, scope of people, and levels of universality are all valid dimensions that represent valid viewpoints and classifications”. Contemporary scholarship is equally important, as it addresses the original scripts alongside the contemporary societal demands. Imam Al Shatibi also declared that consideration of the purposes is the default methodology in worldly affairs (muamalat).

Several theoretical developments occurred during the third to eighth Islamic centuries, culminating in the modern discourse on sustainable development. Table 2 below shows contemporary scholars and their contributions to maqasid theory.

While the concept of maqasid al Shariah has evolved over the period of the time, the literature remains normative with limited empirical insight into how the objectives of maqasid are interpreted and applied within Islamic financial institutions. There are greater expectations that Islamic financial institutions should contribute to the realization of maqasid al Shariah. Therefore, understanding how these maqasid are perceived by practitioners and how they have been operationalized in institutional practices is essential. This study seeks to address the following questions: (1) How do practitioners believe Islamic financial institutions are guided to achieve maqasid al Shariah? (2) What constructs enable the operationalization of maqasid al Shariah at the industry level?

3. Methodology

This qualitative study adopts a constructivist philosophical approach, assuming that there are multiple realities and that reality changes over time and across space (Burr 1995; Marshak and Grant 2008; Jan and Asutay 2019; Nouman et al. 2021). Within this approach, the study employs a qualitative case study strategy, and narrative interviews are used as the primary method of data collection to capture practitioners’ lived experiences.

Several studies have employed qualitative and interpretive approaches to study how maqasid al Shariah has been understood and practiced (Nouman et al. 2021; Güney 2024). Prior research has used in-depth interviews to explore practitioners’ perception of maqasid al Shariah (Sheikh and Hussain 2025). Similarly, interpretive analysis has been applied to analyze how Islamic finance actors understand normative principles within institutional contexts because maqasid-related meanings are not static but are subject to interpretation within specific institutional contexts (Khalil and Hussain 2022). A case study approach has been used to explore how normative Islamic principles are translated into institutional practices (Malik et al. 2021).

In addition, narrative-based case-study has been used to examine how practitioners give meaning to maqasid al Shariah and how maqasid are operationalized within Islamic financial institutions (details in Appendix A).

For the present study, the case study design supported by narrative interviews is appropriate as it enables an in-depth exploration of the phenomenon and yields insights into how practitioners make sense of maqasid al Shariah within a real institutional context. The approach enables respondents to connect personal experiences, normative interpretations, and organizational practices related to maqasid al Shariah coherently (Liaqat et al. 2024), thereby uncovering underlying assumptions, justifications, and tensions that may not emerge from more structured approaches (Jaiyeoba et al. 2024). The study aims to capture both individual meaning-making and the institutional context in which these meanings are produced and negotiated by embedding narrative data within a case study framework. Practitioners, including both bankers and Shariah scholars, will each give meaning to their experiences in the field based on their past learning and understanding of the phenomenon. These meanings become social when they are shared. Additional meaning emerges when these experiences are collected as data and interpreted by the researcher.

The constructivist paradigm for this study is suitable for multiple reasons. Firstly, this research takes a social constructivist stance, arguing that the achievement of maqasid al Shariah is socially negotiated within practitioners’ communities at Islamic financial institutions. Therefore, it is important to consider the perspectives of practitioners, both bankers and Shariah scholars, on the operationalizing of maqasid al Shariah and on what constitutes the newly emerging knowledge-based constructs related to the achievement of maqasid al Shariah. The purpose is to incorporate practitioners’ perspectives from the Islamic finance industry.

Even though case study research can be limited in its scope and in its ability to explain broader macro-level context (Bell and Warren 2023), this approach of combining narrative interviews within a case study is not unique. Several studies have also adopted a similar combination to explore complex social and institutional phenomena (Whedbee 2009; Ferrari 2016)

3.1. Case: Practitioners’ Perspectives

Islamic banking institutions are run by individuals whom we call practitioners. These practitioners are divided into two categories. The first group consists of professionals with a traditional educational background, mostly relating to business, management, banking, finance, or accountancy, with practical experience in Islamic or traditional financial institutions. These practitioners are mostly involved in policy-making activities alongside the daily operations of financial institutions at the management level.

The second group comprises Shariah scholars, including both Resident Board Members (RBMs) and Shariah auditors who review and vet all activities of the Islamic financial institution to ensure compliance with Shariah. The RBMs are responsible for ensuring that Islamic financial products, services, and operations comply with Shariah principles, whereas the Shariah auditors are responsible for independently reviewing and verifying that the bank’s operations comply with Shariah rules.

The operations of Islamic financial institutions (IFIs) cannot be carried out without these two important entities of bankers and Shariah scholars, and they work hand in hand. Therefore, this research treats both parties as a single case and uses the combined name of “practitioners”. The inclusion of both Shariah scholars and management personnel under a single category of practitioners is justified because the phenomenon of Islamic banking is no longer new, and knowledge among these two seemingly different entities has evolved and diffused sufficiently (Malik et al. 2021) to consider them a single entity, at least for the purpose of Shariah compliance.

Further, the regulator of banking industry in Pakistan, the State Bank of Pakistan, through its circular no SBP/IBD circular No. 1 of 2020, has made it mandatory for every newly hired or posted employees in Islamic banking to undergo a one-time Islamic banking training for 40 h (5 days), along with a mandatory annual refresher training for 24 h (3 days) for existing employees in Islamic banking.

Figure 1 indicates that the case under consideration is viewed from the practitioner’s perspective. The unit of analysis is the operationalization of maqasid al Shariah in Islamic financial institutions and window operators. The unit of observation comprises the bankers and Shariah scholars working at the governance level of Islamic banks.

3.2. Data Collection Method

Before discussing data collection, the landscape of the Islamic banking industry in Pakistan must be examined to clearly establish the phenomenon under observation and provide context. As of 31 March 2025, there are six full-fledged Islamic banks operating in Pakistan, with a total branch network of 6093 nationwide. There are a total of 15 conventional banks that offer Islamic banking services in the country. Together, they have a network of 8346 standalone Islamic branches, and they also operate Islamic window operations at 2651 of their conventional branches. As of March 2025, the total asset size of the Islamic banking industry has grown to Rs. 11,510 billion (State Bank of Pakistan 2025).

In this research, the triangulation of diverse data sources (narrative interviews, circulars, notifications, policy documents, and strategic plans) allowed us to construct a multifaceted perspective on how practitioners operationalize maqasid al Shariah in the banks. This also allows us to enhance the reliability of the findings by reducing any potential bias in interpretation (Yin 2018).

The study employed purposive expert sampling, selecting participants based on their specialized knowledge, decision-making authority, and direct engagement in Islamic banking governance and operations (Patton 2015). The objective was not only statistical representation of institutions, but also the inclusion of information-rich experts capable of providing deep narrative insight (Creswell and Poth 2018). This approach facilitated an in-depth exploration of diverse viewpoints and enabled the examination of the underlying reasons for divergence among practitioners. In particular, the expert sampling ensured the inclusion of individuals with direct experience and relevant domain expertise.

A total of 20 narrative interviews were conducted, comprising 10 Shariah scholars and 10 senior practitioners involved in Islamic banking operations (details in Appendix A). Participants were drawn from 11 Islamic banking institutions, including four full-fledged Islamic banks and seven Islamic window operators. Collectively, these institutions represent more than 80 percent of the total assets of Islamic banking in Pakistan (State Bank of Pakistan 2025). The sample selected is consistent with qualitative research standards. For instance, Creswell (2013) suggests that narrative studies typically involve 5–25 participants, while Guest et al. (2006) demonstrate that thematic saturation often occurs within the first 12 interviews in relatively homogeneous expert groups. Furthermore, the concept of “information power,” (Malterud et al. 2016) supports the adequacy of smaller, expert-driven samples when participants possess high levels of relevant knowledge and the research aim is focused. The sample size is also aligned with prior studies employing interview-based case study approaches (Ali et al. 2016; Farrar and Uddin 2020; Thelwall and Nevill 2021; Nouman et al. 2024).

Both full-fledged Islamic banks and Islamic windows operate under the regulatory and Shariah governance framework prescribed by the State Bank of Pakistan. Therefore, the inclusion criteria were based on operational and governance engagement rather than ownership structure. The inclusion of Islamic window operators was methodologically appropriate, as these institutions operate under the same regulatory oversight and Shariah compliance requirements as full-fledged Islamic banks. Their inclusion enhanced institutional variation and strengthened the transferability of findings across different Islamic banking models within the Pakistani context.

Participants in the study were selected based on predefined criteria, including minimum years of professional experience, seniority level, and direct involvement in the phenomenon under investigation. The selected institutions were primarily headquartered in Karachi, the principal financial hub of Pakistan, where the head offices of major Islamic banks are located.

The distribution of participants across two key stakeholder groups, Shariah scholars and bankers, enabled the study to capture and compare differing perspectives. This facilitated a deeper understanding of the sources of divergence in practitioners’ views. Theoretical saturation was reached after seven interviews with Shariah scholars and eight interviews with bankers; however, all twenty interviews were fully transcribed and included in the analysis to ensure completeness and robustness of findings.

All interviews were audio-recorded and transcribed to maintain data credibility and reliability. The use of narrative interviews allowed participants to express their perspectives freely and in detail, thereby enhancing the richness and depth of the data collected.

Table 3. Structure of case.

SNO	Code	Designation
1	S1	Resident Shariah Board Member (RSBM)
2	S2	Resident Shariah Board Member (RSBM)
3	S3	Resident Shariah Board Member (RSBM)
4	S4	Resident Shariah Board Member (RSBM)
5	S5	Resident Shariah Board Member (RSBM)
6	S6	Resident Shariah Board Member (RSBM)
7	S7	Shariah Audit Officer
8	S8	Shariah Audit Officer
9	S9	Resident Shariah Board Member (RSBM)
10	S10	Resident Shariah Board Member (RSBM)
11	B1	Head of Risk Management Department
12	B2	Head of Product Development and Shariah Compliance Department
13	B3	Head of Islamic banking
14	B4	Chief Executive Officer
15	B5	Head of Shariah Compliance Department
16	B6	Head of consumer products
17	B7	Group Head, Islamic Bank
18	B8	Head of Shariah Compliance Department
19	B9	Head of Shariah Compliance Department
20	B10	Head of Product Development

shows the designation and code of the interview respondents:

3.3. Data Analysis

For the analysis and interpretation of large qualitative datasets, Quirkos version 2.5.2 was used, which is a lightweight software application designed for thematic and qualitative content analysis. Compared to other qualitative data analysis software, Quirkos is less expensive, has a more limited feature set, and is simpler to use. Prior to using Quirkos for the analysis, the researcher received a full-day training session from a qualified Quirkos trainer and purchased a perpetual license from the company. Quirkos was used to store all the data so that it could be coded, compared with other patterns, and linked together.

The data was analyzed inductively. The interview transcripts were examined repeatedly to ensure deep familiarity. Based on the research questions, a broader theme, “practitioner’s perspectives” was created, and several codes linked with the theme were devised through reflexive engagement with the data. Following a line-by-line analysis of each interview, relevant portions were added to the existing codes, and new codes were added as needed. After analyzing several interviews, some codes were removed or revised to ensure that the categories accurately reflected the participants’ meanings. Three iterations of coding were conducted, namely descriptive, refinement, and thematic consolidation, which is consistent with thematic analysis approaches, and the typology and comprehensiveness of the codes improved each time. This process ensured that analytical categories were not fixed prematurely but developed in response to repeated readings, enhancing the depth and validity of the reported themes.

4. Findings

Based on the research objectives and research questions, our analysis identified 10 themes concerning practitioners’ perspectives on the maqasid al Shariah. The details are discussed as follows:

4.1. Maslahah (Public Welfare)

Maslahah or public welfare, as suggested by Al Ghazali as the preservation of the objectives of Shariah, is viewed in Islamic legal theory as a jurisprudential device for promoting public wellbeing by removing social evils from society. Meanwhile, Kamali (2008) expanded its meaning to include justice in establishing the equilibrium of advantages and benefits, as well as distributive justice in society. The failure of maslahah, therefore, will result in the failure of Islam to serve its community (Nouman et al. 2021).

Accordingly, an Islamic bank is expected to provide maximum benefit to society and ultimately help eradicate poverty. Public welfare is at the core of Islamic teachings, and consequently, should also be central to Islamic banking. An Islamic bank may earn profit, but should not abandon the spirit of public good and welfare, and it is expected to conduct business ethically. However, a bank must also consider profitability because it is a for-profit organization, not a charitable entity. There needs to be a balance between profit and serving clients with maximum benefits.

Profitability is there, but not at the cost of the client. A bank is not a charitable organization; bankers also have families associated with them, and they take care of them, and the same goes for the clients. Therefore, we need to create a niche where we can facilitate (rather than compensate) the client by offering different free services (e.g., lockers, insurance, travel insurance, ATM insurance) once a certain threshold amount is maintained.

Source: B6, Head product development

Islamic banks strictly adhere to ethical activities, even when they are not explicitly prohibited, thus ensuring all their products are aligned with Shariah and societal welfare. These are clear-cut pieces of evidence that the factor of maslahah is given due weight in the decision-making process of the practitioners.

We make sure that our bank is not involved in any kind of unethical and socially unacceptable activities. There are certain businesses which are not prohibited but are still not good, for example, tobacco, which does not fall under explicit prohibitions but is socially considered a harmful activity.

Source: B2, Head Shariah compliance and product development

Furthermore, banks are expected to be very careful while using the depositor’s money since it is an Amanah. Routing the depositor’s money towards Shariah non-compliant businesses would be harmful for depositors, so if banks channel the money into the right avenues, it contributes to the betterment of society. If a bank provides a loan to a poor person for any productive purpose or even for consumption, it becomes an act of maslahah, as it improves their standard of living and quality of life.

For example, a person who borrows from a bank to construct their own house is better off paying loan installments and eventually owning the house rather than remaining in rented premises and paying rent indefinitely without any ownership claim.

Taking care of depositor’s money is also important from an amanah point of view. Even routing it to the wrong industry would be khayanat. Providing a loan to a person who wants to construct a house for himself is also helping in the eradication of poverty or broadly providing a better lifestyle and a better place to live is also contributing to the achievement of maqasid (probably tehsiniyat).

Source: S5, RSBM

There are many facilities available free of charge to bank employees. For example, Islamic banks support employees through medical facilities for parents, salary continuation for employees for two years after their death, and even free Hajj and Umrah schemes for employees. Banks have even introduced paternity leave for male employees. Furthermore, increased medical insurance limits and loan installment holidays during Eid are among the initiatives implemented for employees.

We also introduced the scheme of free-of-cost Hajj and Umrah for the employees, which has been approved by our board. Now we will be sending one employee with his /her spouse or parent for the Hajj every year. We have also introduced paternity leave for the male employees up to 5 days. We have increased the medical insurance limits for employees, which were previously available for all the dependents collectively, and now apply individually to each dependent.

Source: B4, CEO

Considering these initiatives, the focus on all stakeholders, namely society, depositors, and employees of the banks, clearly shows that Islamic financial institutions do take the factor of public well-being into account when making their decisions and designing policies.

4.2. Business Motives Alongside Which Banks Do Not Consider Maqasid al Shariah as Their Responsibility

Banks, whether conventional or Islamic, are business entities, and their primary focus is to make a profit. A conventional bank may act unreasonably in pursuit of profit, but an Islamic bank is expected to be Shariah-compliant and considerate of the general public’s well-being, alongside the purpose of profit and business motives.

An Islamic financial institution considers business motives as its primary activity, as it is a business entity rather than a charitable organization. Following the same approach, practitioners in Pakistan’s Islamic financial industry regard profit-making as their primary motive and assign little importance to fulfillment or operationalization of maqasid al Shariah as part of their responsibility. In this context, if Islamic banks earn a higher return on equity than their conventional counterparts, it is considered acceptable as long as it is halal. Furthermore, like other Islamic financial institutions, Islamic banks are involved in many nonfinancial activities such as sadaqat, zakah and charities to support the underprivileged in society.

Islam in no way prohibits earning halal profit; it comes under the ambit of ‘jawaz’, and we cannot call it unethical. If they are performing all Shariah-compliant activities and all other requirements are also properly met, then, in the case of saving accounts, if they are not distributing profit, there is no harm in it.

Source: S6, RSBM

Nevertheless, maqasid al Shariah remains important, and activities such as sadaqat, zakah and charity initiatives are undertaken for the betterment of the society. These activities are considered along with profit objectives by Islamic banks, as they are profit-making institutions.

They [Islamic banks] are for-profit organizations. They may perform sadaqat, zakat, charity, help people. When a product comes before us, we do check the maqasid in it, though not too much focus, but we do check what impact it will have.

Source: S5, RSBM

People often develop high expectations from banks when they hear the word “Islamic.” Nevertheless, their primary objective is to earn halal profits, just like any other business entity, and the expectation that banks will fully realize maqasid does not always align with reality.

So, it is our business objective to sell halal products to the people and earn justifiable profit on them.

Source: B4, CEO

Islamic banks in Pakistan are focused on profit in Shariah-complaint manner since they are not generating enough earnings compared to their conventional counterparts. However, it is claimed that once they can generate sufficient profit, as the market evaluates these institutions, like others, primarily on earnings, the focus of Islamic financial institutions will also shift toward fulfilling the maqasid. Placing too much pressure on these institutions that focus only on fulfilling maqasid may harm their solvency.

The profitability of the banks is not enough to take care of the society. Placing additional pressure on the bank, in the form of maqasid al Shariah, could potentially harm them.

Source: B5, Head Shariah structuring

The achievement of maqasid al Shariah is not an obligation for Islamic banks. For the time being, until the bank gets enough muscle, achieving Shariah compliance remains the primary consideration. According to their charter, the banks are not mandated to fulfill maqasid al Shariah.

4.3. Wrong Interpretation and Incorrect Evaluation of Islamic Institutions Based on Maqasid

Practitioners, both bankers and Shariah scholars, are of the view that Islamic financial institutions are often wrongly evaluated in terms of the achievement of maqasid al Shariah. Practitioners believe that maqasid are frequently misinterpreted in relation to Islamic financial institutions, and the true essence for which these institutions are established is often ignored. An erroneous mandate is attached for their performance evaluation, especially when academic researchers link the level of Shariah compliance with the achievement of maqasid al Shariah.

I would evaluate it on the basis of the relevant materials from ‘fiqh’. If something is declared legal, this automatically means that it is in compliance with maqasid. Directly in the name of maqasid al Shariah, there is nothing from the board of directors nor from the regulators. It is just that no objective of Shariah should be violated during the process.

Source: S5, RSBM

An Islamic bank is not an NGO, and attaching maqasid al Shariah to it as a performance criterion is considered inappropriate since it is a profit-making entity. The task of Shariah auditors is to review the checklist approved by the board and regulator against the banking activities, and there is no checklist that evaluates banking practices from a maqasid al Shariah perspective. Therefore, it is considered unfair to evaluate the performance of banks from a maqasid perspective. Furthermore, these maqasid are believed by some practitioners to be primarily applicable to individuals, whereas financial institutions are expected mainly to earn halal profit.

I think maqasid al Shariah is being applied this way, and these maqasid are more applicable to individual human beings than corporate bodies. Banks tend to engage in those activities where they find more profit (the non-participatory modes). At times banks even go non-Shariah compliant just to earn more profit.

Source: B1, Risk management officer

Furthermore, there is general disagreement regarding how maqasid should be measured, as such aspects are subjective and are interpreted differently by different people. Since there is no universal agreement on maqasid measurement, many practitioners believe it is inappropriate to assess financial institutions on this basis.

In my point of view, there is nothing wrong with maqasid al Shariah, but they cannot be measured. There is a lot of subjectivity in the measurement of maqasid al Shariah.

Source: S6, RSBM

Measuring and determining maslahah in particular fields or industries could not be achieved accurately without a consultation with the respective professionals (Al-Sharfī 1997). In dealing with financial issues, Shariah scholars need to consult economists, lawyers and accountants. In other words, considering civil laws, government policies, banking regulations, financial instruments, market circumstances, corporate governance, and social impacts is essential before issuing any Shariah resolution.

4.4. New Industry and Over-Expectation from the Industry

The practitioner working in the Islamic financial industry firmly believes that the industry is relatively new and that it is unfair and unrealistic to expect it to take the full responsibility for the betterment of society. Many practitioners also report that placing the burden of the entire Islamic economic system on just one component, the Islamic banking system, is not justifiable.

For comprehensive results, a complete Islamic economic system is required, implemented across the entire economy with proper legal support and social acceptance.

We ignore the 95% of the pie, since they are free to do anything, and try to implement maqasid al Shariah in the remaining 5% of the activities, which becomes really challenging. When new things start, it takes time to reach a certain level, and for that, major stakeholders are supposed to be on board, which unfortunately has still not been achieved in Pakistan.

Source: S1, RSBM

A newly established Islamic bank with less than 23 percent of total banking assets is expected to deliver results for the betterment of the entire society. Practitioners believe this expectation is unfair, particularly when societal problems have been created largely by conventional economic practices.

It is also reported that whenever a new system is introduced into an economy, its implementation requires time and cooperation from all stakeholders, which is lacking in Pakistan. The regulator has neither developed a fully supportive regulatory system nor effectively taken shareholders on board. Additionally, the industry has not developed any innovative products that could gain immediate acceptance in the market.

It is true that an Islamic bank is just an organ of the whole Islamic economic system, but if we want to get maximum benefit out of it, we can play our role, but only if we specially target it. Presently it is not being done.

Source: S2, RSBM

Practitioners argue that without the implementation of a complete Islamic economy, it is impossible to obtain the full benefits of an Islamic framework through partial implementation via only one component of Islamic financial institutions.

Maqasid al Shariah is a framework, but it is being treated selectively by extracting only the economic dimension. The regulator should not make it mandatory to achieve maqasid al Shariah because, for the time being, we are still trying to correct our basic practices.

Source: B1, Risk management officer

Practitioners further argue that the financial and regulatory environment, including tax laws and court systems, is not fully supportive of Islamic finance. For example, judges within the judiciary may lack sufficient understanding of Islamic finance products and their underlying contracts, such as Bai Salam or running Musharakah, which often leads to delays in dispute resolution.

I agree that maqasid al Shariah are not fully being accomplished, but the industry is still in a premature phase. Yes, maqasid al Shariah should be achieved, but give them some time.

Source: B3, Head Islamic banking

Practitioners, therefore, emphasize that a conducive institutional and regulatory environment is necessary for the proper implementation of maqasid al Shariah, which is still missing in Pakistan, especially when there are only six Islamic banks. Therefore, there is a need to convert the entire system to an Islamic one.

Achieving maqasid is included in our charter, but it will take time. We are not disagreeing with the mandate they have, but the Islamic banking industry is still at an early stage and cannot bear the burden of this huge responsibility. Moreover, it should not be blamed for all these expectations, since it represents only a small part of the whole banking industry.

Source: B6, Head consumer products

Multiple instances reported above from both bankers and Shariah scholars provide sufficient evidence that the partial implementation of the Islamic economic system, by merely having Islamic banks, will not yield benefits for society. It requires complete implementation of the entire system, supported by all stakeholders in every capacity. Under the current circumstances, placing the burden of social betterment and uplift of society solely on the Islamic banking industry represents an over expectation and an unrealistic assumption.

4.5. Justice/Equity

Islam is a divine religion and a comprehensive code of conduct based on justice, fairness and equity at all levels. Therefore, for an entity to be recognized as an Islamic financial institution, these principles cannot be ignored.

Nevertheless, when banks make charitable contributions for the betterment of society, depositors often object, claiming that the bank, as a mudrib, has no right to engage in such activities and that these actions reduce their profit margins. Banks, therefore, are expected to act justly by providing the highest possible returns to depositors.

If they [banks] want to do it [charity], then they must do it with their own money and not with customers’ funds; otherwise, depositors lose trust in the bank and stop bringing their money to it.

Source: B1, Risk management officer

We have the humanitarian sentiments, but not at the cost of our depositors, since they also expect justice from us.

Source: B3, Head Islamic Banking

Practitioners, therefore, stress that justice and fairness must be upheld at all costs, and in certain cases, the regulator plays a role by guiding banks to ensure equitable practices. As custodians of the depositor’s money, banks are responsible for maintaining justice and fairness in their business operations. Moreover, society must not be adversely affected by the operations of financial institutions. If this occurs, it will constitute injustice.

At the same time, shareholders expect reasonable returns on their investment, and fulfilling this expectation also reflects justice and equity on the part of the bank.

Providing dividends to the shareholders is also important.

Source: B4, CEO

Overall, financial institutions are expected to maintain justice and fairness by providing higher returns on customers’ deposits, while at the same time earning reasonable dividends for shareholders and contributing to charitable initiatives aimed at improving the living standards of the underprivileged in society.

4.6. Bankers Consider Auto Inclusion of Maqasid al Shariah in Every Transaction

One of the beliefs prevailing among practitioners in the Islamic financial industry is that Shariah compliance has already been achieved by the product development department during the product design stage. This belief is further reinforced when the product is approved by the Shariah compliance department of the bank, and prior approval from the regulator’s Shariah Advisory Committee further assures practitioners that all relevant parties have verified every aspect of the product’s Shariah compliance.

It is therefore assumed that the product or service will automatically achieve maqasid al Shariah, and that practitioners do not need to engage in further debate about whether any or all of the maqasid have been achieved.

Whenever a product is developed, it is already assumed that it is being designed for halal “maal”. In this case, the achievement of maqasid al Shariah is considered automatic.

Source: S1, RSBM

Practitioners firmly believe that the ultimate source of everything is Shariah, and since maqasid al Shariah have been developed by scholars through the interpretation and extension of Shariah principles, when financial products are developed and approved by Shariah scholars, the maqasid are considered to be automatically incorporated. For example, banks earn halal income by investing depositors’ money in Shariah-compliant products. In this way, they protect and grow the wealth of investors, which is one of the objectives of Shariah. As I said, maqasid al Shariah emerged after shariat, so if institutions are following shariat, I am hopeful that they are achieving maqasid al Shariah to some extent. So, you can see that betterment in society, or in other words, achievement of maqasid al Shariah, occurs automatically.

Source: B3, Head Islamic banking

Islamic banks follow the Shariah in its true spirit and focus more on Shariah compliance. Hence, maqasid al Shariah are believed to be indirectly achieved when Shariah compliance is already embedded in the process of developing new products in banks.

4.7. Prevention from Prohibitions and Provisioning of Halal Options

Islam is a religion that encourages individuals to engage in good deeds, while also promoting activities that create opportunities for others to perform good deeds and providing righteous alternatives for them to follow and benefit from.

Islamic financial institutions play an important role by protecting depositors from non-Shariah-compliant investments, such as interest-based activities and gambling. This presents a significant contribution toward promoting maqasid al Shariah and enhancing social welfare.

Gharar, riba, qimar, interest, deception, all of these must be avoided. Therefore, the bank considered avoidance of such activities as an essential step toward achieving Shariah compliance.

Source: B2, Head Shariah compliance

Practitioners are of the view that the mandate of the Islamic banks is to provide halal financial options to the people, prevent them from engaging in riba-based activities, and discourage immoral practices. They also believe that even if Islamic financial institutions are currently unable to make a major contribution toward achieving maqasid al Shariah, providing halal alternatives to people is itself a significant achievement.

4.8. Shariah Compliance

It is very clear from a review of the literature that although various criticisms are directed at Islamic financial institutions in relation to maqasid al Shariah, nevertheless, practitioners are highly committed to Shariah compliance. They cannot compromise on this requirement, and Shariah scholars are very strict and show no leniency regarding Shariah compliance.

At least Shariah compliance is mandatory. All the focus remains on Shariah compliance. All our operations or products must meet the minimum criteria for conformity with Shariah standards.

Source: S4, Shariah board member

Generally, Shariah advisors in banks, while evaluating products, give the highest priority to assessing them for Shariah compliance, and there is no specific requirement in banking regulations to analyze these products from a maqasid al Shariah perspective.

If I am not doing any non-compliance, then this in itself reflects compliance with maqasid. The first priority is to ensure the rules of Shariah are not violated. At the very least, Shariah compliance is mandatory. All the focus is on Shariah compliance.

Source: S5, RSBM

As long as Islamic products comply with Shariah rulings, they should be acceptable, regardless of the process used to innovate them. The above extracts from the interviews clearly show that Shariah compliance is always prioritized, and practitioners make no compromise on it.

4.9. More Focused on the Protection of Wealth

Islamic financial institutions are grounded in ethical principles and tend to advance maqasid al Shariah. One of the key findings of this study is that Islamic banks are more focused on protecting wealth.

In my opinion, protection of wealth should be the foremost priority since it will make sure that customers’ money is not misused.

Source: S3, RSBM

Furthermore, providing ethical returns in compliance with Shariah is the primary role that Islamic financial institutions focus on, in order to protect society’s wealth.

Our bank is supposed to provide Shariah-compliant halal options to the people and is supposed to ensure protection of wealth for the society.

Source: B2, Head Shariah compliance

The above extracts clearly provide evidence that Islamic financial institutions are more focused on the protection of wealth, and practitioners believe that there is no harm in doing this. They further believe that if an Islamic financial institution is at least actively involved in achieving one of the maqasid al Shariah in these challenges times, it is still a significant achievement.

4.10. Maqasid Are Not Divine but Are Man-Made Interpretations

There is also sufficient evidence that the industry holds the view that maqasid al Shariah are not stated in the Quran or any other source of Islamic jurisprudence but are derived from the Quran and Hadees through extensive human effort.

Maqasid al Shariah is not directly stated in the Quran and Hadiths; rather, they are a human-developed concept.

Source: S2, RSBM

Shariah compliance is defined by scholars to assess whether activities are in accordance with divine revelation or not. If they are, then they are Shariah compliant, and vice versa. Based on this definition, it is concluded that maqasid al Shariah are not a direct criterion for Shariah compliance.

The original “asaal” is the shariat, while maqasid al Shariah are the derived concepts, and that too by humans. First step is shariat, and only afterward comes maqasid al Shariah. Therefore, if we ever see a decision of shariat that does not fulfil maqasid al Shariah, we will consider it right because maqasid al Shariah are developed by a human and are not a divine law.

Source: B3, Head Islamic banking

The respondents, who are practitioners working in Islamic financial institutions, strongly believe that maqasid al Shariah are not divine and were not revealed in the form in which they are currently presented to the industry. They believe that the current form and number of maqasid have been developed through extensive human effort. The responses indicate that this view is deeply rooted in the thinking and psychology of practitioners, and this is a major reason they do not place much emphasis on whether the maqasid are achieved or whether bank policies support their achievement, as they do not see this as being in direct conflict with the Quran and Sunnah.

5. Discussion and Theoretical Contribution

Islamic financial institutions are an important part of an economy, and they are demonstrating growth both globally and at national levels. Whenever the term Islamic is associated with an entity, it raises the expectation level of the market participants, and this effect is even stronger when it is attached to a financial institution, where expectation reaches a particularly high level. Along with the heightened expectation, the market participants also believe that such institutions are responsible for improving the quality of life of the general public and, more specifically, at least that of their own customers. This introduces the role of maqasid al Shariah into the discussion, as they are regarded as higher order objectives of Islam, emphasizing the protection of faith, life, intellect, progeny and wealth, and striving to achieve them is believed to promote public welfare.

Based on this argument, several studies conducted by academicians have reported poor performance by Islamic financial institutions in promoting public welfare. This indicates a gap, suggesting that practitioners within Islamic financial institutions, including bankers and Shariah scholars, may view these issues differently from researchers. To address this gap, 10 practitioners’ perspectives were analyzed and developed.

The following practitioners’ perspectives were developed during the whole research process.

• Public welfare (maslahah);
• Business motives, alongside which banks do not consider maqasid al Shariah as their responsibility;
• Wrong interpretation and wrong evaluation of Islamic institutions on maqasid;
• New industry and over expectation from the industry;
• Justice/equity;
• Bankers consider auto inclusion of maqasid al Shariah in every transaction;
• Prevention from prohibitions and provisioning of halal options;
• Shariah compliance;
• More focused on protection of wealth;
• Maqasid are not divine but are man-made interpretations.

If we look at the key findings of the research conducted, we find that the perspective of public welfare (maslahah) is in line with both the classical and contemporary literature (Shinkafi and Ali 2017; Jamil 1995; Abdelkader 2003; Abozaid and Dusuki 2007). Many classical and contemporary studies related to maqasid al Shariah consider public welfare or maslahah as the foundation of the implementation of maqasid al Shariah, and the findings of this research add further evidence to the existing body of knowledge.

The perspective of justice, equity, and fairness reported in practitioners’ views reflects the fact that practitioners are attempting to meet the expectations of customers and society at large. A practitioner, as a banker, is expected to safeguard the customer’s money and to act justly and be fairly in every action performed on behalf on their behalf.

Shariah compliance is at the core of the Islamic financial system and cannot be compromised at any stage of operations. The findings of this research indicate that practitioners are committed to achieving Shariah compliance as a means of operationalizing maqasid al Shariah, and this is fully consistent with the existing literature.

One key finding from the practitioners’ perspective is that, due to business motives, banks do not consider the realization of maqasid al Shariah to be their responsibility. This is an interesting and novel contribution to the body of knowledge. This belief is also understandable, as a bank, whether Islamic or conventional, is a business entity, and imposing the achievement of maqasid al Shariah as a responsibility does not appear to be rational. While banks are not expected to compromise on Shariah compliance at any level, bringing about the betterment of the entire society is a responsibility that lies beyond the scope of their operations.

Practitioners are also of the opinion that various social welfare indices created by academic researchers incorrectly evaluate Islamic financial institutions and rely on inappropriate proxies to assess the social performance of the financial institutions. Practitioners believe that it is not the responsibility of the Islamic financial institutions to bring about large-scale societal change. Islamic financial institutions represent only a small component of the overall Islamic economic system, and expecting the outcome of the entire system from such a minor component is unrealistic. Furthermore, the Islamic financial industry is relatively young and at a nascent stage is not rational; therefore, it is not rational to compare it with the conventional banking system, which has a legacy of hundreds of years.

Another important aspect reported by practitioners is that bankers consider maqasid al Shariah to be automatically incorporated into every transaction they execute. They believe that this is the responsibility of the board of directors, together with the regulator’s Shariah Supervisory Committee and the Shariah Supervisory Board of the bank, to ensure that all developed products and services are Shariah compliant and contribute toward the achievement of the maqasid al Shariah.

The finding that practitioners focus more on the protection or preservation of wealth than on other maqasid is also understandable, as this objective is the most closely aligned with their core function and essential role within the economy and society.

The view that maqasid al Shariah are not divine and directly revealed in the Quran but rather the result of human efforts is another finding from the practitioners’ perspective. This perception, prevalent in practitioners’ mindset, makes them less committed to the operationalization of maqasid al Shariah.

6. Policy Implications

The findings of this study have implications for both Islamic financial institutions and regulators. At the micro level, Islamic financial institutions can use these findings to align their internal policies, training, and product development with ethical objectives, including promoting social welfare and justice, beyond minimal Shariah compliance. By systematically integrating maqasid into banking operations, these financial institutions can enhance both ethical integrity and public trust. This can further promote the acceptance of Islamic finance in society.

At the macro level, due to diverse interpretations of maqasid al Shariah, there is a need for transparent regulatory guidance from central banks that integrates ethical and moral objectives of Shariah in addition to mere compliance. For example, industry-wide benchmarks could be developed to reflect the broader aims of Shariah. Overall, the research emphasizes the importance of a coordinated approach where regulatory frameworks and institutional practices strengthen each other to realize the higher objectives of Shariah while supporting sustainable financial development in the country.

7. Limitations and Future Research

There are several limitations of this research that may inspire future studies. First, a common challenge in qualitative research conducted through interviews is that practitioners’ opinions are based on their individual perspectives, often disregarding abstract or systemic issues. In this study, participants were asked to interpret their lived experiences, and researchers then re-interpret those meanings, thereby exposing the data to double hermeneutics. To address this issue, we remained as objective as possible by interpreting the data through triangulation.

Second, the limited sample size of 20 participants restricts the generalization of the findings, which is further limited due to a single geographic location with no gender diversity. Finally, while the qualitative approach allows for rich, in-depth insights, future study on this topic could employ quantitative methods or mixed methods approaches across broader contexts, institutions and demographic groups to validate findings of this study and enhance their generalizability.