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Why Shariah Compliance is fundamental in Islamic

Theory of Indebtedness Al-Mithaq

Prof. Saiful Azhar Rosly, Ph.D

International Center for Education in Islamic Finance (INCEIF)

Islamic finance is replete with opinions issued by Shariah advisors

concerning legitimacy of Islamic financial products. Opinions on
Shariah screening, validation of contracts, and capital and money
market instruments are sought after in fulfilling the demand of pious
investors and dedicated Islamic banks and fund managers. The
question is, what is the reason for Shariah complaint? Or simply why
obey the Shariah?

The believer (mukallaf) should be able to give convincing answers

concerning his belief (iman). Answers that make sense. One answer lies
in the theory of indebtedness (al-Mithaq). It is explained in the
following paragraphs.

In general Islam means submission. Sometimes Islam is called al-Din.

But how does “submission” appear important in explaining Islam. This
has a lot to do with the meaning of indebtedness. In fact one of the
meanings of Din is indebtedness and originates from the Arabic root
word DYN. It is this notion of indebtedness that gives deeper meaning
to the reason for human economic existence in Islam.

But in what way is the concept of indebtedness related to man’s

relation with God. Why is man indebted to God, and what is he
supposed to do under such a situation of indebtedness?

The Quran says, “Man, We did create from a quintessence of clay.

Then We placed him as a drop of sperm in a place of rest, firmly fixed.
Then We made the sperm into a clot of congealed blood; then out of
that clot We made a lump; then We made out of that lump bones and
clothed the bones with fresh; then We developed out of it another
creature. So blessed be God, the Best to create”. (Al-Mu’minun {23}:12-
Based on the above Quranic verse, man is indebted to God, his Creator
and Provider, for bringing him into existence and maintaining him in
his existence. Man once did not exist, and now he does.

Certainly, when a person is in debt he is supposed to repay it. But how

is man supposed to repay the debt? Certainly God is in no dire need of
anything as He is the Creator and Sustainer, but the debt than man
owes God must be paid.

Naquib Al-Attas says that in Islam, paying or returning the debts

means to give himself up in service, or khidmah, to his Lord and Master,
to abase himself before Him - and so the rightly guided man sincerely
and consciously enslaves himself for the sake of God in order to fulfill
His Commands and Prohibitions and Ordinances, and thus to live out
the dictates of His Law.

It is clear now that the meaning of man’s existence is related to his

indebtedness to the Creator his subsequent enslavement to His law is
the way how man settle his debt. Man himself is the object of the debt.
In fact the Covenant that man sealed with God, when He says, ‘Am I
not your Lord”, and man’s true self testifying, answered: Yea!”,
requires man to manifest the Covenant (Al-Mithaq) through his
submission in absolute true willingness.

By obeying God’s commandment, the believer has indeed submits his

desires to God’s Will. This is the way how he pays his due to the
Creator. Thus in Islamic finance, Shariah compliance means submitting
business transactions conducted by man to God’s Law which include
the prohibition of riba (interest), gharar(ambiguities), maisir(gambling),
jahala(fraud) in financial transaction. The theory of indebtedness (al-
mithaq) is in play here to explain why Muslims dutifully observe
Shariah principles in the conduct of business and financial