Get to know the 3 Main Principles of Sharia Financial Service Institutions

Financial institutions have function to bridge the movement of funds from various parties. Usually, financial institutions are business entities that focus on financial services, either by raising funds, distributing funds, or doing both at once.

Type of Financial Institutes

There are many types of financial institutions in Indonesia. But in general, we can divide financial institutions into two:

• Bank Financial Institutions. Such as the Central Bank (Bank Indonesia), Commercial Banks, and Rural Banks.
• Non-Bank Financial Institutions. Some examples of non-bank institutions include:insurance companies, stock exchanges, pawnshops, etc.

Currently, Islamic finance in Indonesia is also being discussed a lot. Apart from its enormous potential, Islamic finance is considered more useful for the Muslim community, both in this world and in the hereafter.

Sharia finance also continues to develop with Sharia Financial Institutions (LKS), both from the banking and non-banking sectors. The main point of difference between general financial institutions and LKS is the existence of elements of conformity with the Islamic religion in all their activities.

The principles adhered to by LKS are not only economic theories,but also must be adapted to the Al-Quran and Hadith, both of which are the main guidelines for Muslims.

Islam is a religion that is Rahmatan lil 'Alamin, and Islamic law has covered all aspects of human life, both in this world and in the hereafter. Islamic law does not only pay attention to the relationship between humans (Hablum Min An-Naas) but also pays attention to the relationship between humans and the Almighty (Hablum Min Allah).

As a financial institution that adheres to Sharia principles, all operational activities of Islamic financial institutions must be free from practices that are prohibited by religion. Therefore, as written on the OJK website, LKS must adhere to 3 main principles, namely:

Anti Maisir

In Arabic, Maisir means easy. That is, get a lot of profit easily, without making any effort. Some Ulama eexplainsthat Maisir is "Any form of play that neglects Prayer and Dhikrullah." However, Maisir is often associated with the Qimar (gambling) element. As we know, gambling contains elements of speculation, neglects Muslims from dhikr, and can cause enmity among Muslims.

Allah Ta'ala says:

"O you who believe, verily (drinking) Khamr, Maisir (gambling), (sacrificing for) idols, drawing fate with arrows, are acts of Satan. So stay away from these things so that you will get good luck.” (Al Maidah: 91)

Maisir is also prohibited by the Shari'a because it can make people lazy to work hard, and prefer to make profits by gambling games. Of course ,this is not good for our society.

Anti Gharar

Gharar is something that is not clear as a result of a transaction. Where Gharar usually makes people speculate between profit or loss, between existence and absence without clear knowledge.

The practice of Gharar is also prohibited in Islam because it is considered to be detrimental to many parties. For example, by buying goods in sacks that we do not know what is in them. It could be a gain, it could be a loss. If transactions like this are allowed to continue, it will certainly provide an opportunity for individuals to be able to deceive many people.

Anti-Riba

Riba in Islam means addition to special things, such as debt. Ulama hhasdiscussed the many types of Riba practices that are prohibited by Islam, such as Riba Debt and Riba Nasiah (Deferred).

The arguments for the prohibition of Riba are also found in the Qur'an, Hadith, and the Ijma' of the scholars. Among these arguments:

"Allah has permitted trading and forbidden usury" (Al-Baqarah: 275)

The prohibition of Riba also has many benefits, such as: providing relief for people who have difficulty paying debts, closing the door to injustice, realizing justice, and so on.