Notes on Jurisprudence of the Islamic Banking

Islamic banking has experienced a noticeable decline in enthusiasm and now often finds itself in a defensive position. This is largely due to the state of uncertainty created by certain contemporary juristic opinions. Some have argued for guaranteeing muḍāraba deposits, which in practice has meant linking the depositor’s share of profit to the mere duration of the deposit. Given the constant inflows and withdrawals, it is almost impossible to calculate profits on the basis of actual liquidation.
With respect to murābaḥa—the dominant mode of investment for most Islamic banks—practice has drifted far from the established juristic framework. What now prevails is essentially a sale on description combined with a binding promise, raising significant concerns.
This paper undertakes a methodological examination of the contemporary application of both muḍāraba and murābaḥa contracts. It identifies points of weakness in their implementation and offers possible ways to address them by analyzing the banking process from its simplest to its most complex forms, whether in mobilizing resources or investing them.
Clarity in juristic characterization and avoidance of interest-driven selectivity are crucial for strengthening the role of Islamic banks and consolidating their legitimacy. A bank must either operate as a true muḍārib, bearing risk and sharing in profit, or as a fee-based intermediary without liability. In the case of murābaḥa, banks should abandon binding promises altogether—and ideally dispense with promises entirely—in order to avoid the serious doubts that threaten to create a barrier between Islamic banks and their clientele.
Keywords: Islamic Banking, Muḍāraba, Murābaḥa, Jurisprudence, Financial Contracts

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