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The primary-source ruling in which the OIC Fiqh Academy set out its OWN catalogue of the unresolved problems of Islamic banking and issued eleven…

The primary-source ruling in which the OIC Fiqh Academy set out its OWN catalogue of the unresolved problems of Islamic banking and issued eleven operative recommendations — including two a riba-free household can use directly: that the murābaḥah-to-the-purchase-orderer structure (the one most retail ‘Islamic finance’ actually runs on) ‘should be limited and restricted to instances which fall within the bank’s supervision and where there is protection against deviations from Shariah principles’, with muḍārabah, mushāraka and leasing ‘developed’ in its place; and that the industry must ‘find a Shariah-accepted index to be adopted as a substitute for usury rates of interest in the determination of profit margins in transactions’ — the Academy’s own admission that Islamic-finance profit margins were (and largely still are) priced off conventional interest. International Islamic Fiqh Academy (OIC), Resolution No. 76 (7/8), titled ‘Problems of Islamic Banks’ in both English editions, adopted at the 8th session (Bandar Seri Begawan, Brunei Darussalam, 1–7 Muḥarram 1414H / 21–27 June 1993). HONEST SHAPE: the Resolves clause itself is not a prohibition but a research agenda — it submits a four-theme list of open questions (deposits, murābaḥah, leasing, default-clause contracts) to the Secretariat ‘in order to commission experts to present their findings at future sessions’; the usable substance is in the eleven Recommendations that follow, which are guidance to banks and regulators rather than consumer rulings.

What this source says

THE OIC’S OWN LIST OF WHAT WAS STILL BROKEN. Most of the primary sources in this corpus are prohibitions — this one is different, and more candid. Resolution No. 76 (7/8), from the OIC Fiqh Academy’s 8th session in Bandar Seri Begawan, Brunei (1–7 Muḥarram 1414H / 21–27 June 1993), is the Academy’s own diagnosis of the problems of Islamic banking, followed by eleven recommendations for fixing them. It is worth reading precisely because it is the industry’s central Shariah body admitting, in 1993, which questions it had NOT yet answered — and two of its recommendations bear directly on the products a riba-free household actually meets.

BE HONEST ABOUT THE SHAPE OF THIS RESOLUTION. The operative Resolves clause is not a ruling; it is a research agenda. It says: ‘To submit the following list with its four themes to the Secretariat General of the Academy in order to commission experts to present their findings at future sessions, in the order of priority deemed appropriate by the planning division.’ In other words, the Academy tabled a catalogue of open problems to be studied later. That list itself is instructive — it is the OIC naming the hard questions: Theme I (deposits) includes ‘Guaranteeing investment deposits in ways consistent with Shariah-approved Muḍārabah rules’, ‘Defining the relation between depositors and shareholders’, and, tellingly, ‘Islamic alternative for overdraft accounts’; Theme II is the murābaḥah tangle (murābaḥah in shares, deferred-payment murābaḥah, ‘Procrastination in the settlement of debts’); Theme III is leasing (sale-and-leaseback, maintenance of the leased asset, ‘Combining Ijārah and Muḍārabah’); Theme IV is the default-clause problem — whether a contract may carry a ‘Consensual condition to the bank’s right to cancellation in case of default in payment of installments’. These are open questions submitted for study, not settled rulings, and this entry does not pretend otherwise.

WHERE THE USABLE SUBSTANCE IS: THE ELEVEN RECOMMENDATIONS. After the Resolves, the Council issues eleven recommendations. They are addressed to banks, central banks and the OIC/IDB — institutional guidance, not consumer fatāwā — but three of them tell a household reader something concrete about the products in front of them.

RECOMMENDATION FOURTH — THE OIC ITSELF SAYS TO CURTAIL THE MURĀBAḤAH THAT RETAIL ‘ISLAMIC FINANCE’ RUNS ON. Verbatim (official edition): ‘To the extent possible, the use of Murābaḥah methods to the purchase orderer should be limited and restricted to instances which fall within the bank’s supervision and where there is protection against deviations from Shariah principles governing them. On the other hand, other modes of investment such as Muḍārabah, Musharaka and leasing should be developed with due attention to the monitoring and periodic assessment.’ Read what that means. ‘Murābaḥah to the purchase orderer’ is the cost-plus, client-orders-then-bank-buys-then-resells structure that underlies the great majority of retail Islamic home, car and personal finance. The Academy is not banning it — Resolutions 40/41 permit it with a binding promise — but here it is cautioning, in its own words, that this exact structure is the one most prone to Shariah drift, that it should be LIMITED to cases the bank genuinely supervises, and that the profit-and-loss-sharing modes (muḍārabah, mushāraka) and leasing should be grown in its place. For a reader comparing products, that is a primary-source signal that a murābaḥah-only ‘Islamic’ offering is the weakest of the recognised structures, not the gold standard its marketing implies.

RECOMMENDATION SEVENTH — THE ADMISSION THAT ISLAMIC FINANCE STILL PRICES OFF INTEREST. Verbatim (official edition): ‘Expedite prompt action to find a Shariah-accepted index to be adopted as a substitute for usury rates of interest in the determination of profit margins in transactions.’ This is the single most quietly important line in the resolution. It is the OIC Fiqh Academy stating, as of 1993, that Islamic banks were determining their profit margins by reference to ‘usury rates of interest’ — i.e. benchmarking their markups to conventional interest rates (LIBOR and the like) — and that a Shariah-accepted index to REPLACE that benchmark still needed to be found. It answers, from the primary source, the sceptical question every honest customer eventually asks: ‘if this is halal, why does the rate track the cash rate?’ The Academy’s own answer is that using an interest index as a mere benchmark for a genuinely different (sale- or lease-based) contract was tolerated as a stop-gap while the contract structure itself stayed lawful — but that it is a problem awaiting a real solution, not the intended end state. (Note: this recommends replacing the PRICING BENCHMARK; it does not bless an interest-bearing loan. The lawfulness still turns on the underlying contract, ruled on elsewhere in this corpus.)

RECOMMENDATION THIRD — SALAM AND ISTISNĀʿ AS THE REAL PRODUCTIVE-FINANCE ALTERNATIVES. Verbatim: ‘Give due attention to Salam (forward buying) and Istisna (manufacturing) contracts, as they offer Shariah-compliant alternatives to the conventional modes of productive financing.’ These are the genuine trade- and production-based instruments (a farmer or manufacturer is financed by an advance-paid forward sale) that the Academy wants developed instead of leaning on murābaḥah — the same steer as Recommendation Fourth, from the asset side.

THE REMAINING RECOMMENDATIONS, IN BRIEF. First: Islamic banks and Muslim-state central banks should keep a dialogue so regulators accommodate Islamic banking’s ‘distinct nature’. Second: proper professional training, in collaboration with IRTI. Fifth: build a commodities-exchange market among Muslim countries to replace the international commodity market ‘which is not free from Shariah deviations’ (relevant later to the organised-tawarruq debate, ruled contested under Resolution 179). Sixth: channel surplus liquidity into joint development funds. Eighth: broaden the Islamic financial market through joint bank action with the IDB. Ninth: states should set specific rules for muḍārabah, mushāraka, muzāraʿa, musāqāt, salam, istisnāʿ and ijārah. Tenth: build a shared client database to promote dealing with ‘reliable parties’. Eleventh (verbatim): ‘Call upon Islamic banks to coordinate the activities of their Shariah Supervisory Boards, either by reactivating the Supreme Shariah Supervisory Authority for Islamic Banks or by establishing a new one, so as to ensure the standardization of the activities of Shariah Boards of Islamic banks’ — the primary-source root of the long-running push (later carried by AAOIFI) for standard, cross-bank Shariah governance rather than each bank shopping for its own board’s approval.

HOW A HOUSEHOLD ACTUALLY USES THIS. (a) When a provider markets a murābaḥah/cost-plus product as fully ‘Shariah-compliant’, Recommendation Fourth is the OIC’s own caution that this is the structure most in need of supervision and the one it wants curtailed in favour of profit-sharing — a reason to prefer, where available, muḍārabah/mushāraka (diminishing co-ownership) or ijārah models. (b) When the ‘Islamic’ rate visibly tracks a conventional benchmark, Recommendation Seventh is the primary-source acknowledgement that this benchmarking is a known, unresolved problem — not proof the product is fake, but a fair reason to ask the provider what the actual contract is and how the margin is set. (c) The Theme I–IV study list is a useful map of where the genuinely hard questions sit (deposit guarantees, default penalties, sale-and-leaseback), so a reader knows which claims to probe hardest.

GENUINE DIFFERENCES BETWEEN THE TWO EDITIONS (disclosed, not smoothed). The two translations agree on every point of substance while differing in wording. Session line: official ‘on 1–7 Muḥarram 1414h (21–27 June 1993)’ versus IRTI ‘from I to 7 Muharram 1414H ( 21-27 June 1993)’ (the IRTI ‘I’ is a scan/OCR artefact for ‘1’) — note that, unlike the 2nd-session resolutions in this corpus, the two editions here agree on the Hijri MONTH (both Muḥarram), so there is no Rabīʿ-al-Awwal/Rabīʿ-al-Thānī divergence this time. Resolves: ‘to the Secretariat General of the Academy in order to commission experts to present their findings at future sessions, in the order of priority deemed appropriate by the planning division’ (official) versus ‘to the Academy’s General Secretariat to commission experts and submit the result of their work to the Academy’s future sessions in the priority order chosen by the planning committee’ (IRTI). Recommendation Third: ‘Istisna (manufacturing) contracts, as they offer Shariah-compliant alternatives to the conventional modes of productive financing’ (official) versus ‘Istisna’a (manufacture) contracts, as they offer a Shari’a-compatible alternative to conventional product financing modes’ (IRTI). Recommendation Fourth: ‘limited and restricted to instances which fall within the bank’s supervision … deviations from Shariah principles governing them’ (official) versus ‘curtailed and confined to instances which fall under the control of the bank … departures from the Shari’a principles governing them’ (IRTI). Recommendation Seventh: ‘find a Shariah-accepted index … in the determination of profit margins in transactions’ (official) versus ‘find a factor acceptable Islam … in the determination of margins of benefits in dealings’ (IRTI — ‘a factor acceptable Islam’ is a garbled rendering; the official ‘a Shariah-accepted index’ is the clearer reading, and the two agree that the thing being replaced is ‘usury rates of interest’). ONE GENUINE DIVERGENCE IN THE CLOSING INVOCATION, reported rather than reconciled: the official edition closes ‘Indeed, Allāh is the Giver of success.’ while the IRTI edition closes ‘Allah though knows Best.’ — two different closing formulae, not merely different wordings of one; both are recorded here rather than silently picking one.

AN HONEST NOTE ON WHAT IS AND IS NOT HERE. This is a ‘problems and recommendations’ resolution: its Resolves is a study-commissioning agenda and its recommendations are institutional guidance, so this entry frames it that way rather than as a prohibition ruling. It is NOT one of the procedural deferrals — it delivers eleven concrete recommendations plus a structured four-theme research programme. The reading that Islamic banks ‘price off interest’ is the resolution’s OWN words (Recommendation Seventh speaks of replacing ‘usury rates of interest’ in ‘the determination of profit margins’), not merely this site’s framing. The resolution’s text cites no Qur’an verse and no hadith number, records no madhab tally and no vote count, and names no bank, product, figure or rate — so none is reported here. The worked ‘how a household uses this’ guidance and the cross-links to Resolutions 40/41 (binding-promise murābaḥah) and 179 (organised tawarruq) are the corpus’s own commentary drawn from the resolutions’ shared logic, not additional clauses of Resolution No. 76.

Wording inside quotation marks is quoted from the source. The rest is this notebook’s summary of it — read the original before relying on it.

Provenance

Compiled from: Compiled from TWO genuinely different English translations of the SAME primary resolution, cross-read 2026-07-13, every load-bearing quote machine-verified verbatim against both source PDFs (line-wrap, hyphenation, page-number-insertion and diacritic aware, whitespace-normalised, 21/21 OK): [1] the INTERNATIONAL ISLAMIC FIQH ACADEMY (OIC) OFFICIAL ENGLISH EDITION, ‘Resolutions and Recommendations of the International Islamic Fiqh Academy’ (official edition, October 2021), printing it as ‘Resolution No. 76 (7/8) / Problems of Islamic Banks’; and [2] the IRTI/IDB PRINTED EDITION, ‘Resolutions and Recommendations of the Council of the Islamic Fiqh Academy 1985-2000’ (Islamic Research and Training Institute, Islamic Development Bank, Jeddah), printing it as ‘RESOLUTION N° 76/7/8 CONCERNING PROBLEMS OF ISLAMIC BANKS’. Both editions carry the same 8th session (Bandar Seri Begawan, Brunei, 21–27 June 1993), the same four-theme study agenda in the Resolves, and the same eleven Recommendations. The load-bearing content is the Recommendations: (Third) prefer Salam and Istisnāʿ as Shariah-compatible productive-finance alternatives; (Fourth) LIMIT murābaḥah-to-purchase-orderer to supervised, deviation-protected cases and develop muḍārabah/mushāraka/leasing instead; (Seventh) find a Shariah-accepted index to replace interest rates in setting profit margins; (Eleventh) coordinate / standardise Islamic banks’ Shariah Supervisory Boards. The Resolves clause is expressly a study-commissioning agenda, disclosed here as such rather than dressed up as a ruling.
Source: PRIMARY TEXT (full title; session/city/date; the Resolves study-agenda with its four themes verbatim, including Theme I ‘Islamic alternative for overdraft accounts’ and Theme IV default-clause items; and the eleven Recommendations in full — especially Third (Salam/Istisnāʿ), Fourth (limit murābaḥah-to-orderer; develop muḍārabah/mushāraka/leasing), Seventh (Shariah-accepted index to replace usury interest rates in profit-margin determination) and Eleventh (coordinate/standardise Shariah Supervisory Boards) — plus the closing invocation) from [1] the INTERNATIONAL ISLAMIC FIQH ACADEMY (OIC) OFFICIAL ENGLISH EDITION, ‘Resolutions and Recommendations of the International Islamic Fiqh Academy’ (official edition, October 2021), printing it as ‘Resolution No. 76 (7/8) / Problems of Islamic Banks’ (8th session, Bandar Seri Begawan, Brunei Darussalam, 1–7 Muḥarram 1414H / 21–27 June 1993) — extracted verbatim from the published PDF (https://iifa-aifi.org/wp-content/uploads/2021/12/Resolutions-Recommendations-of-the-IIFA-Official-Edition-Oct-2021.pdf), read 2026-07-13. CONFIRMING SECOND, GENUINELY DIFFERENT TRANSLATION from [2] the IRTI/IDB PRINTED EDITION, ‘Resolutions and Recommendations of the Council of the Islamic Fiqh Academy 1985-2000’ (Islamic Research and Training Institute, Islamic Development Bank, Jeddah), printing it as ‘RESOLUTION N° 76/7/8 CONCERNING PROBLEMS OF ISLAMIC BANKS’, same 8th session, same agenda and recommendations — extracted verbatim from the published PDF (https://zulkiflihasan.wordpress.com/wp-content/uploads/2009/12/majma-fiqh.pdf), read 2026-07-13. THE TWO EDITIONS ARE GENUINELY DIFFERENT RENDERINGS that converge on the same content; genuine wording differences reported rather than smoothed: session line (‘on 1–7 Muḥarram 1414h’ vs ‘from I to 7 Muharram 1414H’, the IRTI ‘I’ an OCR artefact for ‘1’ — and, unlike this corpus’s 2nd-session resolutions, NO Hijri-month divergence here, both editions reading Muḥarram); Resolves (‘Secretariat General … to present their findings at future sessions, in the order of priority deemed appropriate by the planning division’ vs ‘General Secretariat … submit the result of their work to the Academy’s future sessions in the priority order chosen by the planning committee’); Recommendation Third (‘Istisna (manufacturing) … Shariah-compliant alternatives to the conventional modes of productive financing’ vs ‘Istisna’a (manufacture) … a Shari’a-compatible alternative to conventional product financing modes’); Recommendation Fourth (‘limited and restricted to instances which fall within the bank’s supervision … deviations from Shariah principles’ vs ‘curtailed and confined to instances which fall under the control of the bank … departures from the Shari’a principles’); Recommendation Seventh (‘a Shariah-accepted index … determination of profit margins in transactions’ vs ‘a factor acceptable Islam … determination of margins of benefits in dealings’, both replacing ‘usury rates of interest’). ONE GENUINE DIVERGENCE IN THE CLOSING INVOCATION, disclosed not reconciled: official ‘Indeed, Allāh is the Giver of success.’ vs IRTI ‘Allah though knows Best.’ — two distinct closing formulae. Every verbatim quote used above was machine-checked against both source PDFs (line-wrap, hyphenation, inserted-page-number and diacritic aware, 21/21 OK). Trust: high (two independent verbatim primary editions of the same OIC resolution).
School / basis: Comparative / transactional-law with a PRIMARY OIC collective-ijtihad text. Resolution No. 76 (7/8), 8th session (Bandar Seri Begawan, Brunei Darussalam, 1–7 Muḥarram 1414H / 21–27 June 1993), is a problems-and-recommendations resolution, NOT a prohibition ruling — a distinction disclosed here. Its Resolves clause tables a four-theme research agenda ‘to commission experts to present their findings at future sessions’: Theme I deposits (Muḍārabah-consistent deposit guarantees, depositor/shareholder relation, ‘Islamic alternative for overdraft accounts’, zakāh on bank funds), Theme II murābaḥah, Theme III leasing, Theme IV default-clause contracts. The load-bearing substance is the eleven Recommendations: (Third) prefer Salam and Istisnāʿ as productive-finance alternatives; (Fourth) ‘the use of Murābaḥah methods to the purchase orderer should be limited and restricted to instances which fall within the bank’s supervision and where there is protection against deviations from Shariah principles’, with muḍārabah/mushāraka/leasing ‘developed’ instead; (Seventh) ‘find a Shariah-accepted index to be adopted as a substitute for usury rates of interest in the determination of profit margins in transactions’ — the Academy’s own acknowledgement that Islamic-finance margins were benchmarked to conventional interest and needed a lawful replacement index; (Eleventh) coordinate and standardise Islamic banks’ Shariah Supervisory Boards. Res 76 cites no Qur’an verse, no hadith number, no madhab count and no vote, so none is reported here; it names no bank, product, figure or rate. The murābaḥah permissibility itself is ruled in Res 40/41 and organised tawarruq is ruled contested in Res 179; those are cross-links, not clauses of Res 76.
Original: https://iifa-aifi.org/wp-content/uploads/2021/12/Resolutions-Recommendations-of-the-IIFA-Official-Edition-Oct-2021.pdf
Captured: 2026-07-13
Added: 2026-07-13
Trust: Primary or near-primary source with a stable public URL.

Compiler’s note

Added 2026-07-13 (auto-run). The OIC Fiqh Academy’s own ‘Problems of Islamic Banks’ resolution (8th session, Bandar Seri Begawan, Brunei, 1–7 Muḥarram 1414H / 21–27 June 1993) — chosen from the standing NEXT-candidate list (Res 76 or Res 89) over Res 89 (Currency Issues), which would overlap the corpus’s existing heavy currency coverage (Res 21 paper money, Res 42 inflation/debt, Res 84 gold/ṣarf, Res 102 forex). HONESTY UP FRONT: this is a problems-and-recommendations resolution, not a prohibition; its Resolves clause is expressly a study-commissioning agenda (‘to commission experts to present their findings at future sessions’), and the entry says so — but it is NOT a bare procedural deferral like the rejected Res 22/45/78/87: it delivers eleven concrete Recommendations plus a structured four-theme research programme. GEM 1 (Recommendation Fourth, verbatim official): ‘the use of Murābaḥah methods to the purchase orderer should be limited and restricted to instances which fall within the bank’s supervision and where there is protection against deviations from Shariah principles governing them. On the other hand, other modes of investment such as Muḍārabah, Musharaka and leasing should be developed…’ — the Academy itself flagging the cost-plus structure that underlies most retail ‘Islamic finance’ as the one most prone to Shariah drift and asking that it be curtailed in favour of profit-sharing/leasing. GEM 2 (Recommendation Seventh, verbatim official): ‘find a Shariah-accepted index to be adopted as a substitute for usury rates of interest in the determination of profit margins in transactions’ — the primary-source admission that Islamic banks were benchmarking their margins to conventional interest and that a lawful replacement index was still unfound; the honest answer to ‘if it’s halal, why does the rate track the cash rate?’ GEM 3 (Recommendation Third): Salam and Istisnāʿ named as the genuine productive-finance alternatives. Also captured: the Theme I–IV study list (deposit guarantees, ‘Islamic alternative for overdraft accounts’, default-penalty clauses) as the OIC’s own map of the hard open questions, and Recommendation Eleventh as the primary-source root of standardised cross-bank Shariah governance (later carried by AAOIFI). GOLD-STANDARD pairing: two genuinely different English editions cross-read — the Academy’s OWN OFFICIAL ENGLISH EDITION (Oct 2021 PDF) + the IRTI/IDB printed edition (1985-2000), both pdftotext-verbatim. Genuine divergences reported not smoothed: session ‘1–7’ vs OCR ‘I to 7’ (both Muḥarram — NO Hijri-month divergence this time, unlike the 2nd-session entries); Resolves wording; Istisna(manufacturing) vs Istisna’a(manufacture); ‘limited and restricted … supervision … deviations’ vs ‘curtailed and confined … control … departures’; Seventh ‘a Shariah-accepted index’ vs garbled ‘a factor acceptable Islam’; and ONE genuine CLOSING-INVOCATION divergence (‘Indeed, Allāh is the Giver of success.’ vs ‘Allah though knows Best.’). All 21 load-bearing quotes machine-verified against both source PDFs (21/21 OK, whitespace/hyphenation/inserted-page-number/diacritic aware; the sole raw ‘miss’ was a page-number ‘167’ inserted at a page break inside the Fourth recommendation, confirmed verbatim across the break). HONESTY built in: the ‘prices off interest’ reading is the resolution’s OWN words (Rec Seventh); the Resolves is disclosed as a study agenda; the murābaḥah permissibility itself lives in Res 40/41 and organised tawarruq in Res 179 (cross-links, not clauses of Res 76). DROPPED per no-fab: Qur’an verse / hadith number (Res 76 cites none); madhab tally; vote count; any bank/product/figure/rate. Articles 91->92. Clean `rm -rf .next && npm run build` green; `npm run lint` = 0/0. NEXT candidate (substantive, finance-relevant, in both editions, not yet covered): Res 89 (6/9) Currency Issues (check for overlap with Res 21/42/84/102 first), or Res 179’s neighbours on tawarruq/liquidity; AVOID procedural placeholders (Res 22/45/78/87 are deferrals, already rejected).

Topics

islamic-financeislamic-bankingproblems-of-islamic-banksoic-fiqh-academy-recommendationsmurabahamurabaha-to-the-purchase-orderercost-pluspurchase-ordererprofit-margininterest-benchmarkusury-rateshariah-indexbenchmark-ratemudarabahmusharakadiminishing-musharakaleasingijarahsalamistisnaproductive-financeforward-salemanufacturing-contractinvestment-depositsoverdraft-alternativedefault-clausepenalty-clauseshariah-supervisory-boardshariah-governancestandardisationaaoifi-precursorcommodity-marketorganised-tawarruqliquidityribainterestoicinternational-islamic-fiqh-academyiifaresolution-76res-7676-7-88th-sessionbruneibandar-seri-begawan1993primary-sourcecollective-ijtihadrecommendations

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