Vol 1, No 1 (2020) 22–31

Holis­tic Prac­tice of Fiqh Al-Mua­malat: Halal Account­abil­i­ty of Islam­ic Micro­fi­nance Insti­tu­tions

Hel­mi Muhammad

Econ­o­my and Busi­ness Fac­ul­ty, Uni­ver­si­tas Islam Raden Rah­mat, Jl. Raya Mojosari No. 2, Kepan­jen, Malang 65163, Indonesia

Cor­re­spon­dence should be addressed to Hel­mi Muham­mad: helmimuhammad@​uniramalang.​ac.​id

Cite this: Nusan­tara Halal J. 2020, Vol. 1 No. 1 pp. 22–31 (Arti­cle) | Received 1 July 2020 | Revised 4 August 2020 | Accept­ed 6 August 2020 | Pub­lished 21 August 2020 | http://​dx​.doi​.org/​1​0​.​1​7​9​7​7​/​u​m​0​6​0​.​2​0​2​0​v​1​p​0​2​2​-​031


This study aims to dis­cov­er the prac­tice of fiqh al-mua­malat (Islam­ic law of trans­ac­tion fol­low­ing Islam­ic fiqh) as a sharia-com­pli­ant, pri­mar­i­ly the halal account­abil­i­ty of Islam­ic micro­fi­nance insti­tu­tions Bait­ul Maal wa Tamwil (BMT) UGT Sido­giri Indone­sia. This research used a descrip­tive, explana­to­ry design with a holis­tic sin­gle-case design focus and was con­duct­ed from 2019 to 2020. For the data col­lec­tion process, in-depth inter­views were con­duct­ed with the infor­mants. The data were ana­lyzed using an inter­ac­tive mod­el con­sist­ing of data reduc­tion, data pre­sen­ta­tion, and con­clu­sion draw­ing. The results exhib­it that Islam­ic sharia, faith (iman), and good deeds (ihsan) act as the foun­da­tion of fiqh al-mua­malat prac­tices. The com­pli­ant toward sharia does not only rep­re­sent the oper­a­tional sys­tem, but it becomes a work­ing cul­ture through wor­ship prac­tices. Besides, this research also dis­cov­ers that the fiqh al-mua­malat was prac­ticed to ful­fill the halal responsibility. 

Key­words: fiqh al-mua­malat, Islam­ic micro finance, Halal account­abil­i­ty, sharia compliance.


Islam­ic finan­cial sys­tem has gained world com­mu­ni­ties’, the Mus­lim or non-Mus­lim, recog­ni­tion as a unique and uni­ver­sal sys­tem orga­niz­ing goods and ser­vices [1]. The oper­a­tional suc­cess of Islam­ic finan­cial insti­tu­tions has proven that a new finan­cial inter­me­di­a­tion mod­el can sur­vive, as well as excel con­ven­tion­al mod­el [2]. Besides, it is also per­ceived as an eth­i­cal project [3]. That is because the Islam­ic finan­cial sys­tem is based on sharia prin­ci­ples that do not dis­crim­i­nate reli­gious and oth­er life aspects [4]. In oth­er words, Islam­ic law encom­pass­es all human behav­ioral aspects, includ­ing com­mer­cial busi­ness trans­ac­tions [5]. Fur­ther, in the Islam­ic econ­o­my, humans are required to per­form pro­duc­tive activ­i­ties that bring pos­i­tive impacts for oth­ers while pro­hibits destruc­tive activ­i­ties relat­ed to for­bid­den mat­ter [4]. This com­pre­hen­sive Islam­ic sharia becomes the fun­da­men­tal of Islam­ic finan­cial sys­tem acknowl­edged to bring eth­i­cal changes glob­al­ly. Besides focus­ing on inter­est (riba) and oth­er dis­ad­van­ta­geous fea­tures in the process, the Islam­ic finan­cial sys­tem also runs based on part­ner­ship pat­terns, which is per­ceived to be fairer.

As a unique finan­cial sys­tem, Islam­ic finan­cial insti­tu­tions involve five reli­gious com­po­nents that shift­ed its iden­ti­ty and dis­tin­guished it from con­ven­tion­al finan­cial insti­tu­tions. Those com­po­nents include inter­est pro­hi­bi­tion, halal, haram and spec­u­la­tive (gharar) or gam­bling (maysir) con­sid­er­a­tion; zakat (the pre­scribed puri­fy­ing alms) prac­tice; and sharia board exis­tence [6,7]. Its pur­pose is to real­ize a fair soci­ety that avoids exploita­tion and enforce col­lab­o­ra­tion and kin­ship prin­ci­ples. These noble pur­pos­es can be accom­plished once sharia law is strict­ly adopt­ed  [8]. In anoth­er per­spec­tive, the sharia pur­pose of the Islam­ic finan­cial sys­tem is to guide human from homoe­co­nom­i­cus man­ner that mere­ly leads to prof­it attain­ment, to homoislam­i­cus behav­ior based on ethics and morals, as well as avoid­ing con­sumerism and greed [9–11].

These experts’ state­ments indi­cate that to build an eth­i­cal Islam­ic finan­cial sys­tem, Islam­ic finan­cial insti­tu­tions have to pay atten­tion to var­i­ous aspects of Islam­ic law. First, the laws for prod­ucts cir­cu­lat­ed in the mar­ket should be fol­low­ing sharia (al-mua­malah al-madiyah). Sec­ond, the trans­ac­tion process and the goals have to be in line with sharia (al-mua­malah al-adabiyah and al-maqashid al-shari­ah). The sharia com­pli­ance in those aspects will ensure that every trans­ac­tion is halal. Con­trar­i­ly, a lit­tle devi­a­tion from sharia will affect the ille­git­i­mate (haram) sta­tus of the finan­cial trans­ac­tion. This Islam­ic sharia teach­es its fol­low­ers that the attain­ment of halal for­tunes through eth­i­cal ways is pre­ferred than the for­tunes quantity. 

The prob­lems lay in the ways that Islam­ic finan­cial insti­tu­tions assure that every trans­ac­tion is halal and free from uneth­i­cal means. This prob­lem appears as a response from a study that declares Islam­ic finan­cial prod­ucts are com­pli­cat­ed, not pop­u­lar, and hard to be com­pre­hend­ed even by the Islam­ic finan­cial insti­tu­tions’ staffs [12]. Also, the glob­al finan­cial cri­sis gen­er­at­ed from uneth­i­cal busi­ness prac­tices, such as manip­u­la­tion, non-trans­par­ent infor­ma­tion, the pres­ence of incen­tive struc­ture that encour­age tak­ing high risk and col­lu­sion between finan­cial insti­tu­tions and oth­er insti­tu­tions, should not hap­pen with­in Islam­ic finan­cial insti­tu­tions [13]. Results of stud­ies [12,13] reveal that fiqh al-mua­malat (trans­ac­tion based on Islam­ic sharia) under­stand­ing from the Islam­ic finan­cial insti­tu­tions’ man­age­ment and staff are still low. Con­se­quent­ly, it affects the oppor­tu­ni­ties to vio­late the exist­ing sharia laws and the halal lev­el of the finan­cial trans­ac­tion. There­fore, spe­cif­ic reg­u­la­tions that orga­nize sharia com­pli­ance with­in the Islam­ic finan­cial insti­tu­tions and sharia-based coop­er­a­tive are required through the exis­tence of the Sharia Board. This Sharia Board holds a crit­i­cal role to super­vise and ensure the oper­a­tion of Islam­ic finan­cial insti­tu­tions is in line with the prop­er sharia ethics and fiqh al-mua­malat prac­tice to pro­duce the halal busi­ness trans­ac­tion, and to car­ry out oth­er halal education.

Cur­rent stud­ies on sharia com­pli­ance only aim to dis­cov­er the demand of gen­er­al sharia com­pli­ance with­in sharia banks [14,15], the def­i­n­i­tion of Sharia com­pli­ance in the philo­soph­i­cal per­spec­tive [16], the his­to­ry and fea­tures of Islam­ic busi­ness law adopt­ed in finan­cial insti­tu­tions [17] or the busi­ness prac­tices based on sharia relat­ed to the com­pa­ny finan­cial per­for­mance [18]. Those research indi­cate that sharia com­pli­ance is only per­ceived as the needs of busi­ness oper­a­tional in Islam­ic finan­cial insti­tu­tions. How­ev­er, the stud­ies have not inves­ti­gat­ed the sharia com­pli­ance prac­tices (fiqh al-mua­malat prac­tice) in an Islam­ic finan­cial insti­tu­tion that trans­form into a work­ing culture.

The fiqh al-mua­malat prac­tices should not only be man­i­fest­ed in the com­pa­nies’ stan­dard reg­u­la­tion sys­tem but should also be also per­formed dai­ly that even become habit and work­ing cul­ture. The accept­able and eth­i­cal fiqh al-mua­malat prac­tices assure halal busi­ness trans­ac­tions. This cor­re­la­tion is close since, in real­iz­ing halal busi­ness trans­ac­tions, the fiqh al-mua­malat should be per­formed holis­ti­cal­ly rather than partially.

This research fills that gap by inves­ti­gat­ing the fiqh al-mua­malat prac­tices to ensure halal and eth­i­cal trans­ac­tions in Islam­ic board­ing school (pesantren) based Sharia micro­fi­nance insti­tu­tion. This research case was obtained from BMT UGT Sido­giri as one of the biggest sharia coop­er­a­tives that becomes a ref­er­ence in Indone­sia, with more than 3 tril­lion total assets and more than 21.000 mem­bers. Unique­ly, BMT UGT Sido­giri is oper­at­ed by the alum­ni of Sido­giri Islam­ic board­ing school, Indone­sia, with no spe­cif­ic back­ground in the econ­o­my or mod­ern busi­ness­es. This study on fiqh al-mua­malat prac­tices is essen­tial since it becomes part of the work­ing cul­ture that assures halal and eth­i­cal busi­ness trans­ac­tions. Besides, this research also helps to evade the issue of sharia coop­er­a­tive busi­ness prac­tices that are sim­i­lar to the con­ven­tion­al coop­er­a­tive. Com­pre­hen­sion of fiqh al-mua­malat becomes the fun­da­men­tal of busi­ness prac­tices to prop­er run prop­er­ly if there is aware­ness from every stake­hold­er through the Sharia Board role.


This qual­i­ta­tive study used descrip­tive, explana­to­ry design [19] and was con­duct­ed from 2019 to 2020 with a holis­tic sin­gle-case design [20] in BMT UGT Sido­giri Indone­sia. The infor­mants in this study were the head of man­age­ment board, sharia board, head of the branch, head of risk man­age­ment board, and the staff. The data col­lec­tion was car­ried out through an in-depth inter­view [20] with sev­er­al infor­mants. The inter­view results were record­ed and tran­scribed to be the source of dis­cus­sion. The data analy­sis was com­plet­ed using an inter­ac­tive mod­el con­sist­ing of data reduc­tion, data pre­sen­ta­tion. And con­clu­sion draw­ing [21]. To main­tain the research qual­i­ty, the valid­i­ty check, data com­par­i­son, and data ver­i­fi­ca­tion in this research were per­formed using data tri­an­gu­la­tion, as well as observ­er tri­an­gu­la­tion [22].


Gen­er­al­ly, the dis­cus­sion in this study presents fiqh al-mua­malat prac­tices in BMT UGT Sido­giri as the busi­ness fun­da­men­tal to gen­er­ate a halal trans­ac­tion. That cov­ers the basic foun­da­tion of fiqh al-mua­malat prac­tices involv­ing the foun­da­tion of Islam­ic sharia, faith (iman), and good deeds (ihsan). Besides, the mod­el of fiqh al-mua­malat prac­tice that include the law of goods (al-mua­malah al-madiyah) and the law of trans­ac­tion (al-mua­malah al-adabiyah) are also dis­cussed. The dis­cus­sion is con­clud­ed with halal account­abil­i­ty as the effect of fiqh al-mua­malat practices. 

Basic Foundation of Fiqh Al-Muamalat (Sharia Compliance)

Foundation of Islamic Sharia

Sharia means Islam­ic teach­ing. The imple­men­ta­tion of Islam through sharia shapes Mus­lim behav­ior and become the ener­gy in halal busi­ness prac­tices. The research results dis­cov­er that prop­er and accept­able prac­tice of fiqh al-mua­malat starts from the imple­men­ta­tion of sharia. The infor­mants men­tioned that sharia is a set of norms, val­ues, and laws that reg­u­late Islam ways of life. The sharia prac­tice in BMT UGT Sido­giri is man­i­fest­ed in the prac­tice of Duha prayer, Al-Quran recita­tion before the work­ing hour, con­gre­ga­tion­al Zuhr prayer, con­gre­ga­tion­al Asr prayer, con­gre­ga­tion­al prayer after the work­ing hour and week­ly reli­gious stud­ies. The com­mit­ment toward reli­gion through the imple­men­ta­tion of sharia builds work ethics, such as hon­est, vir­tu­ous, respon­si­ble, and not care­less to the assigned task. Besides, it also helps peo­ple to cre­ate prop­er self-dis­ci­pline. It is a dis­ci­pline that appears from self-aware­ness and self- com­mand. Accept­able self-dis­ci­pline affects group dis­ci­pline. In oth­er words, the group pro­duces a max­i­mum result, once each of its mem­bers con­tribute a per­ti­nent respon­si­bil­i­ty and right. The infor­mants’ state­ments are in line with the results of a pre­vi­ous study that finds sharia prac­tices bring social effects and accel­er­ates self-actu­al­iza­tion [23].

There­fore, these Islam­ic sharia prac­tices evolve into work­ing cul­ture in busi­ness prac­tices, even if it is not man­i­fest­ed in the com­pa­ny’s reg­u­la­tion. This sharia prac­tice is the gate of prop­er fiqh al-mua­malat imple­men­ta­tion. The infor­mants also acknowl­edge that sharia com­pli­ance with­in the busi­ness­es car­ries var­i­ous issues, such as the man­age­ment seri­ous­ness, the staffs’ under­stand­ing and aware­ness of sharia.  Through the prac­tice of pray­ing, recit­ing Quran, con­gre­ga­tion­al prayer, and reli­gious study that becomes the work­ing cul­ture, the Islam­ic busi­ness eth­ic and intel­li­gence can be improved. This effort can be the answer to the poor [15].  Besides, it also elim­i­nates the obsta­cles of sharia com­pli­ance, which have been inves­ti­gat­ed [14].

Foundation of Faith (Iman)

Faith (Iman) to Allah is the fun­da­men­tal base for var­i­ous activ­i­ties, includ­ing the behav­ior and action as a form of wor­ship [24]. Also, the iman to Allah becomes the pri­ma­ry foun­da­tion that affects all parts of life, involv­ing the soul, body, behav­ior, not only per­ceived as wor­ship pro­ce­dure but also seen as a virtue prac­tice [25]. The research results exhib­it that the imple­men­ta­tion of Islam­ic sharia in the busi­ness cul­ture, such as prayer, con­gre­ga­tion­al pray­ing, Quran recita­tion, estab­lish eth­i­cal behav­ior, as well as nour­ish the faith. The infor­mants said that iman should be sus­tained since it can fluc­tu­ate. Thus, the prac­tice of Islam­ic sharia in busi­ness cul­ture is crit­i­cal. The essence of Islam­ic sharia in every busi­ness trans­ac­tion can be sensed in the soul with a sol­id faith in Allah.

In addi­tion, the infor­mant also stat­ed that the fiqh al-mua­malat in Islam­ic finan­cial insti­tu­tions remains in the oper­at­ing sys­tem lev­el and has not achieved its core. It is proven by many stake­hold­ers or the man­age­ment of sharia finan­cial insti­tu­tion who are non-Mus­lim. Indeed, every­one can study fiqh al-mua­malat, even the non-Mus­lim, but the ways that a per­son attains its core val­ue can be bur­den­some if the per­son has no iman to Allah. There­fore, oth­er than trans­fer­ring the cul­ture of Islam­ic sharia with­in the busi­ness, the Islam­ic finan­cial insti­tu­tions should begin with recruit­ing Islam­ic board­ing school alum­ni for at least 90% of staff. The Islam­ic edu­ca­tion­al back­ground eas­es the cor­rect and prop­er com­pre­hen­sion of fiqh al-muamalat.

Besides, iman to Allah and its imple­men­ta­tion in busi­ness activ­i­ties ben­e­fit humans in both life and after-life. This con­cept is dif­fer­ent from con­ven­tion­al busi­ness ethics that empha­sizes the world­ly mate­r­i­al prof­its. Faith gen­er­ates two per­cep­tions for the busi­ness­man. First, that pro­duc­tion fac­tor is Allah’s cre­ation that also belongs to Him. Thus, human own­er­ship is excep­tion­al­ly rel­a­tive and lim­it­ed.  There­fore, the will­ing­ness to pur­sue halal wealth and avoid the pro­hib­it­ed (haram) goods­be­come com­pul­so­ry through the accept­able com­pre­hen­sion of fiqh al-mua­malat. Sec­ond, humans are cre­at­ed to wor­ship Allah. Thus, human atti­tude in the busi­ness con­text is for wor­ship­ping Allah. In oth­er words, the busi­ness should be oper­at­ed fol­low­ing the Islam­ic sharia. The infor­mants’ ideas sup­port the result of the pre­vi­ous study stat­ed that all for­tunes belong to Allah and have to be used in His ways [26].

Foundation of Good Deeds (Ihsan)

The com­pre­hen­sion of fiqh al-mua­malat and sharia com­pli­ance in Islam­ic finan­cial insti­tu­tions based on sharia prac­tices and faith to Allah pro­duce eth­i­cal behav­ior (Ihsan) for the staff and the insti­tu­tion. This idea was expressed by the infor­mants. Philo­soph­i­cal­ly, ihsan rep­re­sents good deeds that ben­e­fit oth­ers with no ret­ri­bu­tion [27]. As the base of fiqh al-mua­malat, ihsan pur­pose is to max­i­mize the prof­it, as in pure cap­i­tal­ism, and also con­sid­er fair­ness. The moral and eth­i­cal val­ues in the Islam per­spec­tive is known as akhlak (right­eous) [28,29] that leads to divine aware­ness or known as piety (taqwa) in anoth­er view [30].

The infor­mants stat­ed that fiqh al-mua­malat and sharia com­pli­ance lead to eth­i­cal behav­ior, not only to oth­er peo­ple and the envi­ron­ment but also to Allah. In oth­er words, the imple­men­ta­tion of fiqh al-mua­malat demon­strates sharia com­pli­ance and being eth­i­cal to Allah. That is illus­trat­ed in the halal busi­ness trans­ac­tion using eth­i­cal means that does not breach the Islam­ic sharia. Thus, the foun­da­tion of Islam­ic Sharia, iman, and ihsan are insep­a­ra­ble. This per­spec­tive is dif­fer­ent from the idea of a pre­vi­ous study that estab­lish­es a mul­ti-lev­el frame­work of Islam­ic ethics [31]. Also, the infor­mants stat­ed that the busi­ness prin­ci­ples in the com­pa­ny’s oper­a­tional lev­el are free from an uneth­i­cal trans­ac­tion that only pur­sue prof­its. This fun­da­men­tal becomes the fil­ter of halal prod­ucts pro­duces by BMT UGT Sido­giri. At the man­age­ment lev­el, the insti­tu­tion and the staffs are social­ly respon­si­ble for man­ag­ing and dis­trib­ut­ing alms (zakat), con­duct char­i­ties and phil­an­thropic activ­i­ties that pos­i­tive­ly con­tribute to devel­op soci­ety, uphold the employ­ees’ rights and be envi­ron­men­tal­ly friend­ly, as the busi­ness ethics.

The Practice of Fiqh Al-Muamalat and Halal Accountability

Mua­malat (Islam­ic law) reg­u­lates social inter­ac­tions with the log­i­cal con­se­quence of oth­er peo­ple’s rights being ful­filled. Fiqh al-mua­malat rep­re­sents mate­r­i­al and its advan­tages for peo­ple through con­tract and com­mit­ment framed in sharia [32]. Islam­ic lawhas two aspects, the law of goods (al-mua­malah al-madiyah) and the law of trans­ac­tion (al-mua­malah al-adabiyah). The Islam­ic law of goods is the mua­malat relat­ed to prod­ucts since its objects are halal (per­mit­ted) goods, haram (for­bid­den) goods, syu­bat (in between halal and haram), harm­ful (mud­harat) goods, and ben­e­fi­cial (masla­hat) goods among peo­ple that being bought and sold. On the oth­er hand, the Islam­ic law of trans­ac­tion cov­ers the mua­malat per­ceived from the pro­ce­dure of the trans­ac­tion of goods, with rights and respon­si­bil­i­ties as the enforcer, such as hon­esty, envy, jeal­ousy, lie, and resent­ment [33].  Oth­er than those, Islam­ic law also has two aspects, sub­jec­tive and objec­tive [34]. The objec­tive ele­ment is asso­ci­at­ed with the facil­i­ties and uti­liza­tion of resources to gain the expect­ed result. While, the sub­jec­tive aspect is referred explic­it­ly to Mus­lim’s sub­jec­tiv­i­ty in busi­ness, dif­fer­ent from non-Mus­lim. For a Mus­lim, the social trans­ac­tion in the mate­r­i­al world is still cor­re­lat­ed to tran­scen­den­tal val­ues and should not use finan­cial-mate­r­i­al stan­dards only. Con­trar­i­ly, non-Mus­lim may rec­og­nize this inter­ac­tion as a uni­ver­sal mate­r­i­al rela­tion that has no effect from tran­scen­dent values.

The find­ings show that the fiqh al-mua­malat prac­tices in BMT UGT Sido­giri are not only prof­it-ori­ent­ed but pri­mar­i­ly aim to achieve authen­tic hap­pi­ness. The imple­men­ta­tion of Islam­ic law con­sid­ers the mate­r­i­al (al-madiyah), as well as empha­sizes the process and ethics (al-adabiyah), such as giv­ing a rec­om­men­da­tion [33,34], so that the result does not breach Islam­ic sharia. The man­age­ment team mem­bers most­ly have a reli­gious edu­ca­tion­al back­ground from the Islam­ic board­ing school to under­stand the impor­tance of fiqh al-mua­malat prac­tices in busi­ness trans­ac­tions. They accen­tu­ate that busi­ness trans­ac­tions and busi­ness results should improve their wor­ship. This phe­nom­e­non becomes unique since they have learned fiqh al-mua­malat in the Islam­ic board­ing school; thus, the prac­tices become their experience.

The fea­tures of fiqh al-mua­malat prac­tices in BMT UGT Sido­giri are based on gen­er­al prin­ci­ples. Oth­er than based on the Quran and Sun­na to attain Allah’s bless­ing, Islam­ic law is also dynam­ic and open for ijti­had (indi­vid­ual inter­pre­ta­tion), fol­low­ing the dynam­ic social prob­lem in soci­ety. Fol­low­ing the Min­is­ter of Coop­er­a­tive Reg­u­la­tion No. 16/Per/M.KUKM/IX/2015 and bank of Indone­sia Reg­u­la­tion No: 7/​46/​PBI/​2005 that every con­tract sharia finan­cial insti­tu­tions have to fol­low the fat­wa of Nation­al Sharia Board-Indone­sian Coun­cil of Ule­ma (DSN_​MUI). There­fore, every con­tract appli­ca­tion for prod­ucts from BMT UGT Sido­giri also refers to DSN-MUI’s fat­wa. Besides, the results of a study con­duct­ed by Sharia Reg­u­la­to­ry Body of BMT UGT Sido­giri in inte­grat­ing DSN-MUI’s fat­was and clas­si­cal Islam­ic books are doc­u­ment­ed in a book enti­tled “Book of Sharia Guide­lines from Madza­hib Al-Arba’ah: The­o­ry and Prac­tice in Financ­ing Prod­uct.” Their prod­ucts include mud­harabah, muraba­ha, ijarah, and istis­na’ con­tracts. Besides, it also has oth­er solu­tive and applica­tive con­tracts to ful­fill soci­ety’s demand to avoid inter­est, such as kafalah, rahn, and bai’ al wafa contracts.

Addi­tion­al­ly, the infor­mants also explained that the prop­er prac­tice of fiqh al-mua­malat pro­duces eth­i­cal busi­ness that fol­lows sharia. This state­ment sup­port results of the pre­vi­ous study that find Islam pro­hibits some­one from work­ing reck­less­ly and use every dread­ful means, such as gam­bling (maysir), fraud (gharar), inter­est (riba), and so forth, while demands to con­sid­er the moral respon­si­bil­i­ty [35]. Islam pro­vides a line between what is per­mit­ted (halal) and pro­hib­it­ed (haram). Gam­bling (maysir) cov­ers every aspect with­in the bet­ting [6]. While, fraud (gharar) rep­re­sents uncer­tain­ty [36]. On the oth­er hand, inter­est (riba) cov­ers the increas­es required by the lender to the bor­row­er, since the bor­row­er exceed the des­ig­nat­ed due date [6]. This inter­est has been declared as haram by all cler­ics, not only the Mus­lim cler­ics but also cler­ics from oth­er Abra­ham­ic religions.

The prac­tice of fiqh al-mua­malat in BMT UGT Sido­giri through the com­pli­ant toward DSN_​MUI fat­was and ijti­had from four mad­hhabs that pro­duces prod­uct trans­ac­tion con­tract assures the halal sta­tus though trans­ac­tion that fol­lows Islam­ic val­ues that rep­re­sent the virtue of reli­gion and sin­cer­i­ty to attain Allah bless­ing. The valid con­tract and halal prod­uct demon­strate prop­er sharia prin­ci­ple. Imple­ment­ing an accept­able sharia prin­ci­ple means sin­cere­ly wor­ship­ping Allah, which also exhib­it eth­i­cal means to Allah. In short, the foun­da­tion of Islam, iman, and ihsan are inte­grat­ed with­in the prac­tice of fiqh al-mua­malat. The prac­tice of fiqh al-mua­malat in MBT UGT Sido­giri is illus­trat­ed in Fig. 1.

Fig­ure 1. Holis­tic Prac­tice of Fiqh Al-Mua­malat Practices 

The fiqh al-mua­malat prac­tice in BMT UGT Sido­giri pur­pose is to pro­duce halal prod­ucts based on Islam­ic sharia. This is imple­ment­ed to give edu­ca­tion and train­ing on cre­at­ing con­tracts, specif­i­cal­ly for all heads of branch­es, as the deci­sion-mak­er of trans­ac­tion con­tracts in their area. Edu­ca­tion and train­ing are also pro­vid­ed for the staff. That edu­ca­tion and train­ing aim to achieve a com­pre­hen­sive under­stand­ing of eth­i­cal busi­ness trans­ac­tions based on sharia, as the halal lia­bil­i­ty. An in-depth under­stand­ing of fiqh al-mua­malat prac­ticed in the busi­ness assures three lev­els of halal, name­ly halal prod­uct, halal assur­ance of the prod­uct, and halal assur­ance of the busi­ness. The halal prod­uct means that the prod­ucts of Sharia micro­fi­nance insti­tu­tions are halal, free of inter­est, riba, or oth­er pro­hib­it­ed fea­tures. The halal assur­ance of the prod­uct indi­cates the halal lia­bil­i­ty due to the sharia com­pli­ance through the prop­er and eth­i­cal prac­tice of fiqh al-mua­malat. The halal assur­ance of the busi­ness sig­ni­fies the halal lia­bil­i­ty from the insti­tu­tion’s per­spec­tive because it fol­lows the stan­dards set by DSN-MUI and sharia compliance.

The suc­cess of fiqh al-mua­malat in ensur­ing the halal sta­tus as the busi­ness account­abil­i­ty of BMT UGT Sido­giri can be appro­pri­ate­ly imple­ment­ed by inte­grat­ing the sharia com­pli­ance as the oper­at­ing sys­tem and sharia prac­tices as the cul­ture. The accom­plish­ment of inte­grat­ing the func­tion­al sys­tem and cul­ture is based on a sim­i­lar holis­tic per­spec­tive toward sharia, start­ing from the Islam­ic board­ing school edu­ca­tion. The prac­tice of fiqh al-mua­malat with halal ori­en­ta­tion demon­strates the insti­tu­tion’s excel­lent image to avoid the issue of the sim­i­lar trans­ac­tion between sharia and con­ven­tion­al finan­cial trans­ac­tion. Also, it is part of a strat­e­gy to pro­mote and label sharia finan­cial insti­tu­tions as halal finan­cial insti­tu­tions. This new phe­nom­e­non urges the halal label and halal trans­fer domain in busi­ness, as stat­ed in the result of pre­vi­ous research [37]. Halal lia­bil­i­ty through the holis­tic prac­tice of fiqh al-mua­malat in BMT UGT Sido­giri pro­duces var­i­ous lev­els of halal, as pre­sent­ed in Table 1.

Table 1. Var­i­ous-lev­el Halal Accountability

SourceHalal Lev­elDef­i­n­i­tion
The holis­tic prac­tice of fiqh al-muamalatHalal Busi­ness LiabilityIt cov­ers the entire strat­e­gy of sharia finan­cial insti­tu­tions in ensur­ing Halal busi­ness through com­pli­ance with DSN-MUI standards.
 Halal Prod­uct LiabilityIt cov­ers the prod­ucts of sharia finan­cial insti­tu­tions fol­low the halal stan­dard (such as sharia investment).
 Halal Prod­uct  It rep­re­sents the prod­ucts of sharia finan­cial insti­tu­tion are halal from the law of goods per­spec­tive (free of inter­est, riba, and defect).


Islam­ic finan­cial sys­tem adopt­ed in Islam­ic finan­cial insti­tu­tions is unique, acknowl­edged by peo­ple around the world, and per­ceived to excel in the con­ven­tion­al finan­cial sys­tem. The basic rea­son for that is because the Islam­ic finan­cial sys­tem fol­lows uni­ver­sal and eth­i­cal Islam­ic sharia. The remark­able fea­ture of Islam­ic sharia should be in line with busi­ness­man sharia com­pli­ance trough the prop­er and eth­i­cal prac­tice of fiqh al-mua­malat. This phe­nom­e­non can be found in BMT UGT Sido­giri through the prac­tice of fiqh al-mua­malat in its halal frame­work. The prac­tice of fiqh al-mua­malat is prop­er­ly and eth­i­cal­ly imple­ment­ed through inten­sive learn­ing by the Sharia Board, along with the man­age­ment team. Besides, there is also aware­ness of com­pre­hen­sive­ly imple­ment­ing Islam­ic sharia through the con­tin­u­al reli­gious rit­u­al that shapes the work­ing cul­ture. The sharia com­pli­ance through the fiqh al-mua­malat prac­tices is not only per­ceived as the tech­ni­cal oper­a­tion of sharia finan­cial insti­tu­tion but also as the work­ing cul­ture. The inte­gra­tion of these two func­tions becomes the key to suc­cess in the fiqh al-mua­malat prac­tices in BMT UGT Sido­giri and can be the ref­er­ence for the Islam­ic finan­cial insti­tu­tion. The appro­pri­ate and eth­i­cal prac­tice of fiqh al-mua­malat has a noble ori­en­ta­tion as halal lia­bil­i­ty for a halal prod­uct, halal prod­uct account­abil­i­ty, and halal busi­ness accountability.


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Corresponding author biography

Hel­mi Muham­mad works at the Fac­ul­ty of Eco­nom­ics and Busi­ness, Uni­ver­si­tas Islam Raden Rah­mat, Indone­sia. He received his Ph.D. in man­age­ment sci­ence from Uni­ver­si­tas Braw­i­jaya, Indone­sia, in 2019. His research inter­ests include Islam­ic eco­nom­ics, Islam­ic finance, man­age­ment, and busi­ness. He also becomes a busi­ness prac­ti­tion­er and chair­man of the sharia super­vi­so­ry board at the Bumi Mer­an­ti Wan­gi Islam­ic micro­fi­nance insti­tu­tion, Malang, Indonesia.

© 2020 by the author. This is an open access arti­cle dis­trib­uted under the Cre­ative Com­mons Attri­bu­tion License, which per­mits unre­strict­ed use, dis­tri­b­u­tion, and repro­duc­tion in any medi­um, pro­vid­ed the orig­i­nal work is prop­er­ly cited.