Integration and Development of Zakat Collection and Distribution in the Islamic Finance Industry

Abstract

Zakat possesses a high-ranking position in Islam due to several reasons. First, it is an economic and financial system that provides a permanent financial resource for the public treasury. Second, zakat is a social system that fulfills the needs of poor people who represent the majority of the population in most countries and strengthens Muslim nations. In addition, it is an important means of cooperation and mercy among people. Third, zakat is considered a political system where the state through its officers is responsible to collect and distribute zakat in a fair manner. The prophet (peace and blessing of Allah be upon him) paid high attention to zakat. He used to send workers to collect zakat and he personally supervised the process of distribution. Likewise, his Rightly Guided Caliphs used the best approaches to collect and distribute zakat. In the light of contemporary developments in all aspects of life, particularly the financial aspect, it is not effective to use ancient approaches of collecting and distributing zakat. It is not appropriate nowadays to send ṣāʿī (zakat officers) to collect zakat in the way it was practiced centuries ago or open the door for individuals to collect and distribute zakat by themselves. Currently, there are various ways and means to collect and distribute zakat through governmental entities or through family funds that exist in some countries. The present study seeks to provide a new and important approach to collect and distribute zakat within the contemporary Islamic finance industry based on Shari'ah policy and public interest. Furthermore, the study highlights the social responsibilities of Islamic banks and emphasizes that the role of Islamic banks should not only constrain to finance and investment, but also to strive to achieve Shari'ah objectives through applying the wide concept of Islamic rules and values. The most notable role that Islamic banks could assume toward the community is to take care of collecting and distributing zakat in collaboration with governmental entities. The current study expects to come up with a framework for zakat collection and distribution system in the Islamic finance industry.