DPD6033 Ethics in Islam Chapter Two

1. 2.0 BANKING
ETHICS (09:03)
DPD6033 ETHICS IN ISLAM

2. 2.1 Demonstrate the
banking ethical system
from conventional point
of view .

3. 2.1.1: Define an abuse of position and
misuse of information.
Abuse of position:
•The act of using one’s position of power in an abusive way, this can take many forms
•such as taking advantage of someone
•gaining access to information that shouldn’t be accessible to the public
• manipulating someone with ability to punish them if they don’t comply.
•hiring relatives or friends who do not have abilities/knowledge/skill

4. Misused of information
•Is using information for the wrong purpose or illegal purpose.
• example: selling customers’ information to the credit card agency or any other party.

5. ABUSE OF POSITION & MISUSE OF INFORMATION
5
AGENCY PROBLEM
ASYMMETRIC
INFORMATION
Shareholders Management
Establishment of
corporate governance
framework
Large shareholders
Main bank system
Market forces
Monetary incentive
SEPARATION OF OWNERSHIP & CONTROL
Institutional investors

6. 2.1.2: Determine the completeness and
accuracy of record.
• All the customers and organizations documents must be proper
completeness and accuracy for recording by FI
• Example: Make sure all the customers record are update and complete with
the prior documentation

7. 2.1.3: Describe the confidentially of
communication and transaction.
• A registered person should take every precaution to protect and preserve the
confidentiality of customer information communicated to him in the course
of everything. He must not in any way use such information for personal or
another person's gain. Under this principle all customers communication and
transaction must be keep confidentially by FI.
• Example : all staffs bank are prohibited to communicate customers
information to publics

8. 2.1.4: Discuss the relevant treatments
a) Unethical Behavior –as conduct that have been done by someone is contra with the ethical behavior .
- code of ethics for example is GP7 by Bank Negara Malaysia
- whistle blowing
- ethics training programs.
b) Ethical Behavior - making decision is good for other.
- Reward –cash/non-cash - Praise
- Appraisal

9. Test of Ethical Behavior
Test that have been made to person for scaling ethics of the person, there have several type of
the test using by the company for their employee.
Customer complaint
Express of customers guts or feeling regarding ethic and unethical behavior. There have
several ways to overcome the customer complaint, among the way are as below taken from

10. 2.2 Understand the
banking ethical system
from Islamic point of
view

11. 2.2.1: Relate the Islamic ethical approach to
business social responsibility.
• Human Rights Dimension
• “Allah said, ‘I have made oppression unlawful for Myself and for you, so do not
commit oppression against one another’” Sahih Muslim, vol. 3, hadith no. 6254.
• “Help your brother whether he is the oppressor or the oppressed....If he is an
oppressor, prevent him from doing it, for that will be helping him, and if he is
oppressed he should be helped (against the oppressor)” Sahih Muslim, vol. 3, hadith no.
6246.

12. • Human Resource Dimension
• “Your employees are your brethren over whom Allah has given you authority. So if one
of you has his brother under his control, you should feed him with the like of what you
eat and clothe him with the like of what you wear. You should not overburden him
with what he cannot bear, and if you do so, help him in his job” Sahih Muslim vol.
3, hadith no. 4093.
• “Allah (SWT) says: “I will be an opponent to three persons on the Day of Judgement:
one who makes a covenant in My Name but proves treacherous; one who sells a free
person (as a slave) and consumes the price; and one who employs a labourer and
receives his full labour but does not pay his wages” Sahih al-Bukhari, vol. 3, hadith no. 2.

13. • Environmental Dimension
• “And when he turns away, he strives throughout the land to cause destruction therein
and destroy crops and animals. And Allah does not like mischievous acts” (Al-Qur’an
2:205).
• “And do no mischief on the earth after it has been set in order, but call on Him with
fear and aspiration. Indeed the mercy of Allah is near to the doers of good” (Al-Qur’an
7:56).

14. • Philanthropic Dimension
• “And fear Allah as much as you can, listen and obey; and spend in charity for the benefit of
your own souls. And those saved from the covetousness of their own souls, they are the
ones who achieve prosperity” (Al-Quran 64:16).
• “Every Muslim must pay sadaqah (charity).” A companion asked, “What about someone
who has nothing to give?” The Prophet replied, “Then let him do something with his two
hands and benefit himself. That will be charity.” A companion asked, “But what if he cannot
do that?” The Prophet replied, “Then he can help someone who is needy.” They asked,
“What if he cannot do even that?” The Prophet replied, “Then he should enjoin the doing
of good.” Still again they asked, “But what if he cannot do that?” The Prophet replied,
“Then he should refrain from evil, for that is a form of charity.” Al-Bukhari’s al-Adab al-
Mufrad, hadith no. 225

15. 2.2.2: Describe the principles of Islamic ethics.
First
•Islamic ethics is transcendental; this is so, because the determination of what is ethical
and what is not or what is proper and what is improper, all comes from Allah (s.w.t). In
Islam, the source of morality transcends human desires and culture.
•It is a divine code which descended from the divine realms. Legislation of moral
conducts or otherwise, depends on the divine scripture (al-wahy al-Ilahiyi) which
transcends the limits (changes) of time and culture.
•This make Islamic ethics vary from conventional ethics in which ethical conducts are
characterized as bad or good based on their utilitarian outcome and gains.

16. Second
•In the Islamic ethical system, man’s nature is not evil nor graceless, but good (fitrah).
Man is born with good natural disposition; evil traits are acquired and additional to the
human nature.
•Upon birth, man is innocent and his nature is not ungracious which requires redemption or baptism to wash
his original sin; every person begins his life ethically sane and sound, not weighed down by any original sin.
•In fact, at birth man is already above the zero point in that he has the revelation and his rational equipment
ready for use, as well as a world all too ready to receive his ethical deed.
•In this understanding, man and the world are either positively good or neutral, but not evil.
In due time, this good character might become obscured by envy, hate, ego, jealousy,
utilitarian and prejudice.

17. Third
•As a universal code of conduct, Islamic moral standards teach universal justice and human equality. First of all, ethical
propositions do reflect universal moral truths regardless of culture, race, religion, nationality, or any other distinguishing
feature; thus moral relativism has no place in Islam.
•Second, human beings are equal and there is no favouritism of any ethnic groups over another; no individual is closer or
nearer to Allah (s.w.t) except through good deeds. As such, discrimination and division of mankind into good or bad,
intelligent and less intelligent, privileged or otherwise, based on ethnicity and kinship, have no place in the Islamic ethical
system.
•Moral quality (taqwa) and educational qualifications (ilmu) are what differentiate man. In this conception, tribalism is
replaced with ummatism, while ethno-centrism is replaced with universalism.
•Concepts like Cast System of Hinduism, Original Sin of Christianity and Chosen Community of Judaism have no place
in the Islamic ethics. In this understanding, regardless of race, skin color, language, region, age and social class, man and
woman are good only when they command good and prohibit evil (al-amr bi al-ma’ruf wa al-nahy an al-munkar).

18. Fourth
•Human conducts are judged to be ethical or otherwise, depending on the intention of the individual and in accordance with
the divine texts (nusus al-shariah).
•Human conduct is considered morally good (amal salih) by fulfilling two conditions. First, the conduct must be done with
good motives (niyyyah hasanah).
•Second, must be in accordance with the norms of the shariah. In this case, both the motive and means (way) of conduct must
be good. Good intentions cannot turn immoral actions into good, while good outcomes cannot justify the morality of immoral
means; as such, Islamic ethical system is neither consequential nor utilitarian.
•Thus, a person’s behavior can be wrong even if it results in the best possible outcomes. For instant, stilling or roping the
wealthy of others to feed needy people is immoral.
•The reason is because, though feeding needy people is good, however, stilling is immoral in itself and nothing can justify it.
Similarly, an act can be righteous even if it results in a negative outcome. For instant, to defend your wealth and family is
morally good even if that results your death.

19. 2.2.3: Discuss the model of Islamic ethics.
• Shariah provides a concrete framework to determine the optimal way to
balance the rights and responsibilities of various stakeholders. In particular,
the principles of maslahah have been used throughout Muslim history to
prevent and resolve problems arising from potentially conflicting rights and
responsibilities in different fields.

20. THANK