Shariah-compliancy of Islamic P2P lending practices: identification of issues and way forward

• Main Authors: Takidah, Erika, Kassim, Salina
• Format: Conference or Workshop Item
• Language: English; English
• Published: 2020
• Subjects: BPH Islamic Economics; HG3368 Islamic Banking and Finance
• Online Access: http://irep.iium.edu.my/87446/19/87446_Shariah-compliancy%20of%20Islamic%20P2P.pdf; http://irep.iium.edu.my/87446/20/87446_Shariah-compliancy%20of%20Islamic%20P2P_certificate.pdf; http://irep.iium.edu.my/87446/; http://lppm.tazkia.ac.id/index.php/2020/11/22/8th-asean-universities-international-conference-on-islamic-finance-8th-aicif-2020/
• Institution: Universiti Islam Antarabangsa Malaysia

Shariah-compliancy is an important aspect of all Islamic financial instruments and transactions. With the growth of innovation in the financial industry, Islamic fintech's presence added players in the Islamic finance industry with digital platform characteristics that must comply with sharia. This study aims to examine the Islamic Peer-to-Peer (P2P) provider's sharia-compliant implementation as part of the Islamic fintech business model. Adopting a descriptive approach using the qualitative research method, a thorough analysis is undertaken on digital contract papers, prospectuses and the positions of parties involved in six Indonesian Islamic fintech companies. This involves analyzing the shariah-compliant quantitative characteristics of the company's prospectus with financial details showing the provider's financial reporting related to interest, debt and non-permissible income screening. The uniqueness of the digital sector is that the shariah-compliant implementation job is not only the Shariah Supervisory Board's duty but the contribution of all interested parties, namely investors, providers, partners and business owners/borrowers. The study finds that the introduction of Sharia-compliant on the Islamic P2P Platform has been well enforced, avoiding usury (riba), gharar and maisyir, and ensuring that the business activities are offering halal products. The findings of the study is expected to provide insight into research on the theme of Islamic fintech and compliant shariah so that it can continue to develop in terms of Islamic financial products and services so that it can become a benchmark in the implementation of shariah-compliant Islamic fintech products.