The Purpose-Based Oversight of Islamic Banking: An Analytical and Evaluative Study of the Extent of Realization of the Objectives of Sharia.

Abstract

This research aims to shed light on the concept of Maqāṣid-based oversight (al-raqāba al-maqāṣidiyya) within Islamic banking operations, considering it a qualitative extension of traditional Sharī‘ah compliance. Unlike standard Sharī‘ah oversight, which primarily ensures formal adherence to legal structures, Maqāṣid-based oversight evaluates the extent to which Islamic financial practices fulfill the higher objectives of Islamic law—such as social justice, economic development, and the prevention of exploitation. The study is grounded in a central problem: the apparent insufficiency of formal Sharī‘ah compliance in achieving these overarching goals, particularly in light of contemporary economic and social challenges. It questions whether the current model of Islamic banking is genuinely distinct from conventional finance or merely mimics its structure with symbolic adjustments. This research highlights the importance of adopting a Maqāṣid-oriented supervisory approach—one that focuses on the real-world impacts and outcomes of Islamic financial products rather than their mere conformity with recognized contractual forms. To address this issue, the research employed multiple methodologies, including analytical-evaluative, descriptive, and inductive approaches. The study is structured into two main sections: the first explores the theoretical foundations of Maqāṣid-based oversight, including its role in guiding financial policy and the challenges to its implementation; the second proposes practical criteria and mechanisms to enhance Sharī‘ah oversight by incorporating Maqāṣid considerations. The research concludes that activating Maqāṣid-based oversight is no longer a theoretical luxury, but rather an institutional and reformative necessity to preserve the integrity and distinctiveness of Islamic finance. It emphasizes the urgent need to restructure Sharī‘ah supervisory boards to integrate systematic Maqāṣid evaluation. The study concludes with practical recommendations, including the establishment of an independent Maqāṣid oversight authority, the review of existing financial products, and the incorporation of Maqāṣid dimensions into the standards of prominent Sharī‘ah-governing bodies such as AAOIFI.