Islamic Finance: The four guides behind Sharia-based investment

In last week's column I covered an important issue in Islamic finance which can sometimes get very contentious.

This was the difference of opinion between the Sharia boards of different Islamic banks over the structure and documentation of certain financial or investment transactions.

We learned that the Holy Quran and Sunnah the life and sayings of the Prophet Mohammad (PBUH) were the primary and undisputed sources of guidance in Islam. But the four legendary imams (leaders of their respective madhab, or methodology) of the predominantly practised Sunni Islam differed on relatively minor issues.

The four imams are Imam Abu Hanifa, Imam Shafai, Imam Maliki and Imam Hanbali. Today I will shed some light on the life of Imam Abu Hanifa, one of the important imams. But before that it is important to clear up a misconception.

Some followers of the these imams believe the various rulings by their respective imams are actually the opinions or views of that particular imam. Research shows this is not correct since a vast majority of the opinions related to these imams are directly based by them on the Holy Quran and Sunnah.

Ruling

If a person belonging to the Hanafi madhab seeks a ruling on a certain issue, he is actually looking for the ruling derived by Imam Abu Hanifa directly from the Holy Quran and the Sunnah.

This is also the case with the followers of the other imams, proving the point that there is consensus by these great imams on the vast majority of issues faced by their followers in everyday life.

This actually narrows down the scope for any differences and such matters are left to the interpretation of present-day scholars.

However, there is an underlying condition that the interpretations, which may differ from scholar to scholar, must remain within the Sharia boundaries.

In this context, it is helpful to allude to a verse from the Holy Quran which says that whoever wants to explore the text of the Quran for something new and undiscovered will not be disappointed and the treasures of the Quran will never be fully exhausted.

Let us get to know the first of the four legendary imams on whose combined methodology the present pillars of Islamic finance and investment are based.

Imam Abu Hanifa was born as Numan Ibn Al Thabit Al Numan in AD698 (80 Hijri) in Kufa (about 170 km from Baghdad). He was the first of the four imams and was fortunate enough to see the last few companions of the Prophet Mohammad.

Intellect

He learned Fiqh (Islamic jurisprudence) from Imam Jaffer Sadiq and Hammad Bbn Abi Sulaiman great Faqihs (Islamic jurists) of his time.

He was brought up to become a Qadi (judge) but because of his amazing intellect and superior ability to memorise and interpret innumerable Hadiths (sayings of the Prophet Mohammad) in a flawless manner, he chose to become an imam.

His decision was based on the pressing need to provide authentic guidance in the early era of Islam.

Due to his dedicated efforts he attained an unparalleled position in a short period of time and as the message of Islam spread far and wide, his fame spread worldwide.

Imam Abu Hanifa's work over his 70-year lifetime included the first classification and compilation of matters relating to Islamic jurisprudence, which still commands great admiration and respect among Islamic scholars.

Today, more than half of the Sunni Muslims follow Imam Abu Hanifa, who is also called Imam Al Azam (the greatest imam).

His followers are found in India, Pakistan, Afghanistan, Turkey, Iraq, Syria, China, North Africa, Egypt, Albania, Balkans, Central Asia and in the Malay Archipelago.

Sohail Zubairi is vice-president, Sharia structuring, documentation and product development, Dubai Islamic Bank