Urf has a vital role in Islamic economy development. In the world of finance, it is common that Islamic finance system being described as ‘interests free’. However, it is more than just that as the finance system in Islam also includes the equitable distribution of wealth, fulfilment of contracts’ obligations and others that is complying the principle of sharia. Therefore, some of these activities had existed during the period of Prophet Muhammad and are being passed down to its companions and their generations had been using the customs and norms in their economic activities. Thus, Urf (customs) plays an important role by making the economic activities during the period of Prophet Muhammad as one of the sources of law and even some of the practices from pre-islamic period during the time of Khulafa Ar-Rashidun are being retained and established some useful teachings in the modern era.
An example to illustrate the practices of urf in the modern era is the constructive possession or Murabaha. Back in the day of the prophet, there is this practice which refers to a person who has no possession on an asset but have the legal possession over it . Such practice is called Qabd Hukmi. Thus, due to the permissible of using customs as sources of law, such practice is retain in the modern time which is the concept of Murabaha. Murabaha is a contract of exchange of sale and purchase with predetermined cost and profit. The buyer and seller agreed on the cost plus price which allows the buyer to pay overtime in order to sell the item. This can be seen in purchasing a car on bank loan. The bank will retain the legal ownership until the payment of the loan ends. However, this is different from usury or riba which is considered as haram or prohibited in Islam. The concept of Murabaha is that the buyer and seller agreed on the higher price instead of charging interests. It is considered as profit on the sales of goods and thus makes it religiously permissible .
Besides, the extensive example of the function of urf in islamic finance system is the concept of Mudarabah. Mudarabah had existed in the pre-islamic period and the muslim jurists had agreed on the legitimacy of mudarabah transaction. Mudarabah is a contract executed between two parties. One party is supplying the capital or rabbumal and the other acts as agent or manager (mudarib) by supplying the labor and skill, for investing in a pre-determined activity, which yields each party a share of the earnings as determined at the time of the investment .
The problem involving the use of urf or customs is that the calculation of remuneration in Urf Kifaya because remuneration is subject to households, food, the people, time and their life. To solve such problem, adequacy of urf being referred to urf economic formula which is appropriate to people, community and country. For example, the urf in Malaysia is that the index shows that the use of smartphone and internet makes smartphone as basic needs. Also, the use of car or motorcycle is a basic need reinforced during the Prophet Kidhr and Moses where poor people owned boat for living. In those days, owning a boat can make living by fishing or transporting people. Thus, this is applicable as urf in the modern day where people needs car or public transport to get to work.