SUMMARY
Islamic finance promises more than just interest-free banking. At its philosophical core sits a concept called maqasid al Shariah — the “higher objectives” of Islamic law, which call for protecting faith, life, intellect, family, and wealth while actively promoting justice and public welfare. However, academic researchers have long criticized the Islamic finance industry for falling short of these lofty goals, arguing that many Islamic banks simply mirror conventional banking with an Islamic label attached. A new study asks a more direct question: what do the actual bankers and religious scholars running these institutions think about all this?
Researchers from the Centre for Excellence in Islamic Finance at Pakistan’s Institute of Management Sciences conducted 20 in-depth narrative interviews — 10 with senior Islamic bankers and 10 with Shariah scholars — drawn from 11 institutions collectively representing over 80% of Pakistan’s Islamic banking assets. Rather than testing whether banks hit predetermined benchmarks, the team simply asked practitioners to explain, in their own words, how they understand and apply these ethical objectives in daily practice.
Ten distinct perspectives emerged from the conversations, and together they paint a nuanced, sometimes uncomfortable picture. Many practitioners genuinely embrace public welfare as core to their mission, pointing to free services for struggling customers and generous employee benefits like fully funded pilgrimage trips. At the same time, a significant number openly stated that pursuing these higher ethical goals isn’t really their job — banks, they argued, are profit-making businesses first, not charities, and expecting otherwise is simply unrealistic for a young industry holding under a quarter of Pakistan’s total banking assets.
Other perspectives revealed deeper tensions. Some bankers admitted they assume ethical objectives are automatically satisfied once a product clears Shariah compliance review, without further reflection. Others focused almost exclusively on protecting depositors’ wealth, treating that single objective as sufficient. Perhaps most strikingly, some practitioners flatly stated that these “higher objectives” aren’t divinely revealed at all — they’re human interpretations developed by scholars centuries after the Quran, and therefore carry less binding weight than direct religious compliance.
For everyday customers who choose Islamic banking expecting a fundamentally different, more socially conscious alternative, these findings offer a reality check worth understanding. Islamic banks in Pakistan do maintain strict religious compliance and do offer certain welfare-oriented services. However, the researchers found no consistent, institution-wide commitment to actively pursuing broader social justice or wealth redistribution as a core banking mission. Instead, that mission remains genuinely contested territory — even among the very people running these institutions.
The study’s authors argue this gap matters for regulators too. Without clearer industry-wide standards for what “achieving maqasid” actually looks like in practice, banks are largely left to interpret their own ethical mandate — and, as this research shows, they’re interpreting it in ten fairly different directions.
A Big Promise Behind a Growing Industry
Islamic finance has grown into a genuinely global industry, and Pakistan sits firmly within that growth story. As of March 2025, the country hosted six full-fledged Islamic banks alongside 15 conventional banks offering Islamic banking services through dedicated windows. Together, these institutions operate more than 8,300 standalone Islamic branches plus another 2,650 Islamic windows tucked inside conventional bank branches, commanding total assets exceeding Rs. 11,500 billion.
Numbers like these suggest genuine momentum. Yet growth alone doesn’t answer a harder question that’s followed Islamic finance for decades: does the industry actually pursue Islam’s deeper ethical mission, or has it simply repackaged conventional banking under a religious label? That deeper mission has a name — maqasid al Shariah, meaning the higher objectives of Islamic law. Scholars trace the concept back centuries, to jurists like Al Ghazali, who argued Shariah exists to protect five essentials: faith, life, intellect, family lineage, and wealth.
Academic researchers have repeatedly measured Islamic banks against these objectives and found them wanting, often concluding that the industry converges with capitalist norms rather than pursuing genuine social transformation. Consequently, a research team led by Shafiullah Jan decided to flip the usual approach. Instead of measuring banks against an external academic yardstick, they simply asked the people running these institutions what maqasid al Shariah actually means to them, and how — if at all — they put it into practice.
Getting Inside the Room
Conducting this kind of research required real access. The team secured 20 in-depth narrative interviews with senior figures across Pakistan’s Islamic finance sector: 10 Shariah scholars, including both resident board members and Shariah auditors, and 10 senior bankers involved in day-to-day operations and policy decisions. Participants came from 11 different institutions — four full-fledged Islamic banks and seven Islamic window operators — collectively representing more than 80% of the industry’s total assets in Pakistan.
This wasn’t a quick survey with tick-box answers. Instead, researchers conducted lengthy narrative interviews, allowing practitioners to explain their reasoning in their own words rather than selecting from predetermined options. Afterward, the team transcribed every conversation and analyzed the material using specialized qualitative software, coding recurring themes through multiple rounds of refinement until clear patterns emerged.
Notably, the researchers reached thematic saturation — the point where new interviews stop revealing genuinely new ideas — after just seven scholar interviews and eight banker interviews. Still, they completed and analyzed all 20 conversations to ensure thoroughness. What emerged were ten distinct, sometimes conflicting perspectives on what maqasid al Shariah really means inside a working Islamic bank.
The Study at a Glance
| Detail | Figure |
|---|---|
| Total interviews conducted | 20 |
| Shariah scholars interviewed | 10 |
| Senior bankers interviewed | 10 |
| Institutions represented | 11 (4 full banks + 7 Islamic windows) |
| Share of Pakistan’s Islamic banking assets covered | Over 80% |
| Full-fledged Islamic banks in Pakistan (as of March 2025) | 6 |
| Conventional banks offering Islamic services | 15 |
| Total standalone Islamic branches nationwide | 8,346 |
| Islamic “windows” inside conventional branches | 2,651 |
| Total Islamic banking industry assets | Rs. 11,510 billion |
| Distinct perspectives identified | 10 |
Source: Jan, Abdullah & Muzafar, Religions (MDPI), 2026
Where Bankers Genuinely Embrace the Mission
Not every finding painted a skeptical picture. Several practitioners described real, tangible commitments to public welfare, a concept known in Islamic jurisprudence as maslahah. Bankers pointed to concrete examples: free services like lockers and travel insurance once customers maintain a certain balance, fully funded Hajj and Umrah pilgrimage trips for employees, extended medical coverage for staff and their parents, and even paternity leave policies. Additionally, several interviewees described genuine caution around ethically questionable-but-technically-permitted businesses, such as tobacco financing, which they avoid despite no explicit religious prohibition.
Justice and equity emerged as another area of authentic commitment. Practitioners described real tension between competing obligations — protecting depositors’ expected returns while also supporting charitable initiatives — and generally resolved that tension by insisting depositor interests come first. As one risk management officer explained, banks shouldn’t fund charity using customer deposits without consent, since doing so would itself constitute a form of injustice toward depositors who trusted the bank with their money.
Shariah compliance itself showed the strongest, most consistent commitment across every single interview. Bankers and scholars alike described religious compliance as completely non-negotiable, with Shariah advisory boards showing zero tolerance for shortcuts. This finding aligns closely with existing academic literature, confirming that whatever else practitioners disagree about, strict religious rule-following remains the industry’s genuine bedrock.
Where the Cracks Start Showing
However, alongside these genuine commitments, the researchers uncovered perspectives that complicate the industry’s ethical narrative considerably. A notable share of practitioners argued, quite directly, that pursuing maqasid al Shariah simply isn’t their institutional responsibility. Banks, they insisted, are profit-making businesses rather than charities, and burdening a young industry — one holding well under a quarter of Pakistan’s total banking assets — with society’s broader welfare seems both unfair and unrealistic.
Some practitioners went further still, suggesting the entire premise of measuring Islamic banks against maqasid al Shariah rests on a fundamental misunderstanding. These higher objectives, they argued, apply more naturally to individual believers than to corporate institutions, and no regulatory checklist actually requires banks to demonstrate maqasid achievement. Consequently, they view academic criticism of the industry’s “poor maqasid performance” as measuring banks against a standard nobody officially asked them to meet.
Perhaps the most revealing perspective involved a kind of automatic assumption. Several bankers explained that once a product clears Shariah compliance review and receives regulatory approval, they simply stop thinking about maqasid al Shariah altogether — treating ethical achievement as something that happens automatically, without requiring further deliberate effort. Meanwhile, others admitted they focus almost entirely on wealth protection, treating that single objective as sufficient rather than actively pursuing the full, broader framework encompassing faith, life, intellect, and lineage too.
Ten Perspectives Practitioners Hold on Maqasid al Shariah
| Perspective | What It Means in Practice |
|---|---|
| 1. Public welfare (maslahah) | Genuine commitment shown through free services and generous employee benefits |
| 2. “Not our responsibility” | Banks prioritize profit; achieving broader social goals isn’t seen as their job |
| 3. Wrong interpretation/evaluation | Practitioners feel academics measure banks against standards nobody asked them to meet |
| 4. New industry, unfair expectations | Islamic banking holds under 25% of assets; too small to carry society’s full burden |
| 5. Justice and equity | Depositor interests come first; charity shouldn’t come at customers’ expense |
| 6. Automatic assumption | Once Shariah-approved, products are assumed to satisfy maqasid without further thought |
| 7. Preventing prohibited activities | Simply offering halal alternatives to interest-based products is seen as real achievement |
| 8. Shariah compliance above all | The one area of universal, non-negotiable commitment across every institution |
| 9. Focus on wealth protection | Many practitioners treat safeguarding depositors’ money as the primary, sufficient goal |
| 10. “Not divine, man-made” | Some view maqasid as scholarly interpretation, not direct revelation — reducing urgency |
Source: Jan, Abdullah & Muzafar, Religions (MDPI), 2026
Why “Not Divine” Matters More Than It Sounds
Among all ten perspectives, the final one carries particular weight for understanding practitioner behavior. Several interviewees explicitly stated that maqasid al Shariah, unlike core religious law itself, doesn’t appear directly in the Quran or Hadith. Instead, scholars developed and refined the framework over centuries through interpretive reasoning. Because of this, some practitioners view maqasid as fundamentally secondary — useful guidance, certainly, but not binding in the same way as explicit religious rulings.
This distinction isn’t merely academic hairsplitting. According to the researchers, this belief appears deeply embedded in practitioner psychology, and it substantially explains why many bankers don’t prioritize maqasid achievement as heavily as outside critics expect. If a ruling technically satisfies Shariah compliance but arguably falls short of broader ethical objectives, some practitioners simply accept the ruling as correct anyway, since they view human-derived maqasid as subordinate to established religious law.
What This Means for Customers and Regulators
For everyday customers choosing Islamic banking, these findings carry practical significance worth understanding. Strict religious compliance genuinely does remain non-negotiable across the industry — that commitment showed up consistently, without exception, across every single interview. However, customers expecting Islamic banks to actively pursue broader social justice, wealth redistribution, or systemic societal transformation may find that expectation isn’t uniformly shared by the industry itself.
The researchers argue this gap points toward a clear policy opportunity. Currently, no standardized regulatory benchmark defines what “achieving maqasid” concretely looks like for a bank in practice, leaving individual institutions to interpret their own ethical mandate. Consequently, the study’s authors recommend that Pakistan’s central bank develop clearer, industry-wide guidance connecting compliance requirements to these broader ethical objectives — not to replace profit-making, but to ensure Islamic finance’s deeper promise doesn’t quietly fade into background noise.
Ultimately, this research doesn’t accuse Islamic bankers of hypocrisy. Rather, it reveals genuine, good-faith disagreement about what an Islamic bank’s actual job really is — a debate playing out inside boardrooms just as much as in academic journals, with real consequences for how the industry evolves from here.
Reference: Jan, S.; Abdullah, A.; Muzafar, N. Operationalizing Higher Ethical Objectives: Piety, Ethics, and Institutional Practice in Pakistan’s Islamic Financial Sector. Religions 2026, 17, 468. https://doi.org/10.3390/rel17040468
