Sayyiduna Abu Hurayra (radi Allahu anhu) reported that Sayyiduna Rasoolullah (sallal laahu alaihi wasallam) said: Imaan has over seventy branches, and modesty is a branch of Imaan. (Muslim)
It is very significant that modesty has been particularly stressed as apart of the faith. It is because modesty reflects a state of mental piety. Wahidi is of the opinion that modesty is something, which sustains a man spiritually and morally. It implies restraint from doing anything abominable. There is a Hadith in Tirmidi, which succinctly explains the significance of this quality. Once Sayyiduna Rasoolullah (sallal laahu alaihi wasallam) said to his companions: Fight shy of Allah, it is His right. They replied: Praise be to Allah! We do fight shy. Upon this Sayyiduna Rasoolullah (sallal laahu alaihi wasallam) observed: This is not what Haya (Modesty) really implies. To fight shy of Allah in fact means that you should fully guard your mind and all thought crowded in it and stomach and all that is contained in it against evil. And remember death and what would come after it in the grave. He who does it fights shy of Allah.
It is narrated on the authority of Imran Bin Hussain (radi Allahu anhu) that the Messenger of Allah (sallal laahu alaihi wasallam) said: Modesty brings forth nothing but goodness. Bushair Bin Kab (radi Allahu anhu) said: It is recorded in the books of wisdom, there lies sobriety in it (modesty) and calmness of mind in it. Sayyiduna Imran (radi Allahu anhu) said: I am narrating to you the tradition of the Messenger of Allah (sallal laahu alaihi wasallam) and you talk of your books.
Sobriety and tranquillity of mind are closely related with each other. The man who is Allah-fearing and shuns evil would never be whimsical; his would be a calm mind as it would not be disturbed by evil thoughts.
However, modesty sometimes becomes a weakness when a man conceals the truth and falls to give a dispassionate verdict on the deeds and thoughts of a man or a group. A man, either out of fear or misplaced courtesy, keeps silence or does not boldly condemn a wrong view or a wrong act. Such weakness is often shown when an act is done either by the ruler or by a friend or by one with whom we have certain interests to serve. Islam does not encourage this type of modesty.