The Sharia Ruling on Unrestricted Mudarabah Investment Certificates in Libyan Banks in Light of the Central Bank of Libya Circular No. (9) of 2024: An Analytical Jurisprudential Study

Abstract

ABSTRACT

Contemporary Islamic banking is witnessing rapid development in the innovation of investment instruments that require high levels of efficiency and Sharia compliance, most notably collective investment structures. This research aims to clarify the Sharia ruling on investment certificates based on the Islamic Mudarabah formula, which were launched by the Central Bank of Libya. The problem of the study lies in the extent to which these contemporary certificates align with the established jurisprudential controls of simple (two-party) Mudarabah in Islamic jurisprudence, especially given their transformation into a complex, multi-party financial investment structure. The Significance of the study Lies in providing an updated jurisprudential grounding that keeps pace with emerging financial issues within the Libyan banking environment, and offers a Sharia and practical reference for local financial institutions to ensure the validity of their transactions and their compliance with the provisions of Islamic Sharia. To achieve this objective, the researcher adopted the inductive approach by tracking and surveying the jurisprudential rules and Sharia texts governing the Mudarabah contract and its contemporary applications, alongside the analytical approach to deconstruct the operational mechanisms of the Libyan investment certificates and assess them against Sharia controls. The research reached several findings, most notably: the permissibility of issuing Mudarabah investment certificates in the aforementioned banking format in Libya, provided there is continuous and close monitoring by Sharia supervisory boards over all executive steps, in addition to the permissibility of announcing an expected—rather than actual—profit rate based on accurate studies and analyses of the financial market conditions.