International Center For Education in Islamic Finance (INCEIF)
www. inceif.org
The application of Hisbah in the Islamic financial markets should be
based on how it (i.e. Hisbah) was institutionized in the early days of Islam. It should not be misconstrued to run on an economic and commercial orientation alone. The concept of Hisbah lies in the Quranic injunction “enjoining the good and forbidding the evil” amr bil ma’ruf wannahi ‘anil munkar” All persons with an Islamic authority actually acted on the same principle as above. As described by Ibn Taimiyah these include: Greater military authority (wilayat al-harb al- kubra) like: the Prime Minister (niyabat al-saltana) Lesser authority such as: 1. police (shurta), 2. the magistracy (wilayat al-hukm) or 3. the financial authority (al-dawawin al-maliya) 4. the hisba authority In this sense the Hisba authority complements the other authorities and not overriding them. The overall objective of the Hisbah is to facilitate society to perform the ‘Ibadat (i.e. worshipping Allah swt). This “Ibadat can be categorized into 3 categories as given below with the respective Hisbah functions:
1. those relating to the rights of God such as religious/ritualistic
activities – punctuality of prayers, organization of Jumaah/Friday congregations and maintenance of mosque.
2. those relating to the rights of people such as community affairs and
behaviour in the market like accuracy of weights and measures and honesty in dealings those related to both such as municipal administration such as keeping the roads and streets clean and preventing the building of a factory or dwelling place that may damage community interest.
The practice of Islamic financial transactions today may need some
degree of monitoring as it must reflect true label, which is one aspect of Shariah auditing. The Hisbah system can be examined closely and some principles can be extracted from it (i.e. Hisbah) to make way for a transparent system of check and balance in the Islamic financial landscape. The public should be given an avenue to relate their experiances and also critique of current practices. Some may include Islamic banking practices such as:
1. charging al-bai bithaman ajil customers with higher profit rates than interest-rates.
2. selling assets without effecting transfer of title
3. Buying assets from customers with a condition that the latter must buy it back
4. imputing penalty charges similar with conventional instruments
5. Conducting leasing (ijarah) without liability of ownership