Legal Aspect of Islamic Finance

Nowadays, a number of Islamic banks look forward to compete with contemporary conventional financial institutions. However, conventional transactions, which are not recognized by the Shari'ah (Islamic law), are totally rejected when relying on ribä (usury). Therefore, although in principle it would not necessarily be inappropriate to compete with conventional institutions, Islamic institutions should carefully uphold the spirit and purposes of the Shari'ah. Transactions should not simply be designed to meet all Islamic requirements while at the same time deviate from the substance and spirit of the Shari'ah.