The shariah is based on the quran, the sacred text of islam, and it governs all aspects of personal and collective life of muslims. It is vital for such financial institutions to form a shariah supervisory board ssb consists of fiqh muamalat experts to guide their transactions and operations in accordance with the shariah. As a legal system, the sharia law is exceptionally broad. The companys primary business must be halal lawful according to islamic religious law.
If you look at the organization of such a firm, you often find the sharia board reporting to the board of directors, executive management, or executive board. Pdf shariah supervisory boards size impact on performance in. Sharia supervisory board ssb is one of the main part of corporat e governance in islamic bank ib that should be disclose d as a form of social reporting in their annual report. This report attempts to provide a brief and indicative overview of both universes. Yes, the shariah high supervisory board is responsible for fatwas, contract specimen, arbitrage, consultations relating to islamic legal aspects, training, research, lectures, and. Guidelines on the governance of shariah committee page 612 b to avoid conflict of interest and for reasons of confidentiality within the industry, an islamic financial institution shall not appoint any member of a shariah committee in another islamic financial. The sharia law itself cannot be altered but its interpretation, called fiqh, by muftis islamic jurists is given some latitude. Meezan bank has a team of professionals in the shariah. Shariah supervisory board of kuwait finance house kuwait and kuwait finance house bahrain. Sharia supervisory boards ssbs are established within the structure of islamic financial institutions ifis to ensure the credibility of sharia compliance. The fatwa and sharia supervisory board of dubai islamic bank comprise of scholars of high repute, with specialization in islamic sharia and with high levels of expertise and experience in law, economics and. Summary the shariah supervisory board of the dow jones. We appreciate the efforts of the staff of shariah compliance department and shariah audit department for their efforts in promoting and strengthening the environment of shariah. They have been advising regulators, the islamic finance.
The structures and processes established within an instiution offering islamic financial services iifs for monitoring and evaluating shariah compliance rely essentially on arrangements internal to the firm. In sharia governance, the ssb is the main tool which ifis apply to be presumed as sharia. D in financial law from the university of london, in the uk. This research examines the effect of audit committee role and sharia supervisory board role on financial reporting quality. Na, the whole financial regulatory system is islamic. Banking supervision, islamic banks, regulatory framework. The shariah supervisory board s rulings and resolutions are binding on the bank. By being incorporated in the institutional structure, a shariah supervisory board. The members of sharia committee are the scholars with knowledge and expertise in islamic jurisprudence.
Keywords performance, islamic banks, shariah governance, shariah supervisory board. Functions of the shariah supervisory board 3briston and elashker 1986 stated that the functions of ssb lay in three. Analysing the role of shariah supervisory boards in. Yes, the shariah high supervisory board is responsible for fatwas, contract specimen, arbitrage, consultations relating to islamic.
Yes, malaysian sec islamic capital market department. The independent sharia supervisory board of crestmount capital crestmount fund i includes the foremost experts in the fields of islamic economics and islamic finance from the worlds most advanced and mature sharia. He is associated as a member of shariah supervisory board of mutual funds, as well as member of the teaching faculty of darululoom, karachi. This research aims to examine the correlation between the sharia supervisory board ssb and corporate governance in terms of the performance of islamic banks profitandloss sharing pls. A sharia board also shariah supervisory board, advisory board or religious board certifies islamic financial products as being sharia compliant i. The distribution of profit and allocation of losses on investment accounts was in line with the basis and principles approved by the sharia. Policy brief on corporate governance for islamic banks and. Ssb or in some islamic financial institutions known as shariah committee, is one of the most important governance mechanism of an ifi to ensure compliance with shariah.
Because compliance with shariah law is the underlying reason for the existence of islamic finance, islamic banks and conventional banking institutions that offer islamic banking products and services should. To ensure compliance to the shariah, islamic financial institutions use the services of shariah boards comprised of shariah scholars. Shariah supervisory board mufgs shariah supervisory board in dubai consists of three worldrenowned scholars in shariah law and islamic finance. Staff discussion notes are published to elicit comments and to further debate. Salim also holds a masters degree in islamic banking and finance from the international islamic university of malaysia. Official pdf, 46 pages world bank documents world bank group. Optimizing the role of the sharia supervisory board dps in sharia financial institutions.
In addition, he is a founding member of association of shariah scholars of the gulf cooperation countries gcc since 2007. The sharia board, or sharia supervisory board ssb, sits near the top of an islamic financial companys governing structure. Contracts, and transactions conducted by the bank throughout were in accordance with the standard contracts preapproved by the sharia a supervisory board. Shariah governance practices and regulatory problems of. Islamic banking is a system that is based on shariah terminologies. Compliance with shariah is the distinctive characteristic of an ifi as compared to conventional financial. Accounting and auditing organization for islamic financial. Shariaa supervisory board report bahrain islamic bank. Shariah governance practices and regulatory problems of islamic insurance companies in bangladesh. The purpose of this paper is to examine the extent to which the shariah governance through shariah supervisory board ssb functions of malaysian islamic banks is affected by their financial. Because compliance with shariah law is the underlying reason for the existence of islamic finance, islamic banks and conventional banking institutions that offer islamic. In sharia governance, the ssb is the main tool which ifis apply to be presumed as sharia compliant. This research is focused on the topic of sharia governance sg in indonesia.
Pdf sharia supervisory board and social performance of. Independent shariah supervisory board vital for islamic. The main role of this body is to ensure the compliance of sharia. Corporate governance, shariah advisory boards and islamic banks.
Considering the breadth of the field of islamic fiqh, and in light of the many developments and changes of the modern economy and its complexity, in addition to the need for a good judgment and deep honest diligence to understand the fiqh rules to get the shariah opinion in financial. An independent sharia supervisory board approves all alizz islamic banking products and services. Shariah plays a vital role in the fast developing islamic finance market. Pdf shariah supervisory board ssb and performance of. Pdf corporate governance, shariah advisory boards and islamic. It is the responsibility of the shariah supervisory board. Abdul latif mahmood al mahmood chairman shaikh al mahmood is a member of the shariaa supervisory board of takaful international and abc islamic bank, kingdom of bahrain.
The structure of sharia boards for islamic financial. Alliance law fundamentals alliance born of agreement and act. Islamic banking regulation and supervision international. Shariah supervisory board is to advise the islamic financial instutions on shariah matters to ensure conformity with shariah rule in its operations at all time, endorsing and validating relevant documentations pertaining to the products and services of the islamic financial. The data is provided from 33 islamic banks in indonesia that was taken by. Compliance with shariah is the distinctive characteristic of an ifi as compared to conventional financial institutions. This paper examined the role of shariah supervisory board ssb on internal shariah audit effectiveness in islamic financial institutions ifis in bahrain. Shariah supervisory board the shariah supervisory board is an independent body and comprises specialist jurists in islamic commer cial jurisprudence.
Shariah supervisory board guidance financial group has assembled one of the most respected groups of islamic scholars to its shariah supervisory board. Mubarak holds a bachelor degree in shariah from islamic. Islams sharia law is cast from the words of muhammad, called hadith, his actions, called sunnah, and the quran, which he dictated. Islamic finance, islamic banking, participation finance, financial regulations, sukuk markets, infrastructure finance, financial. Ahmed jama is the author of several books and articles on islamic financial services and holds a doctorate of philosophy degree in islamic finance from medina islamic university, saudi arabia. The study employed two stages of data collection and analysis.
Corporate governance in islamic financial institutions munich. Shariah supervisory board islamic international arab bank. This paper aims to discuss the different practices and regulatory frameworks of shariah supervision in islamic financial institutions ifis across organisation of islamic cooperation oic member states and to identify the gaps in current shariah supervisory practices. Profiles of shariah compliance officers sindh bank limited islamic. Among the main issues surround corporate governance in islamic banking is the role of the sharia supervisory board ssb. The members of the board and the sharia supervisory board should be. However, the insertion of this body into the internal structure of the corporation can prove challenging, as this body, with its powerful. The main role of this body is to ensure the compliance of sharia law along the entire business process. Islamic finance is an equitable mode of finance that derives its principles from the shariah, the islamic law. Shariah supervisory board ssb has the advantage of being close to the market. The accounting and auditing organization for islamic financial. The islamic financial services board ifsb is an international standardsetting organisation that promotes and enhances the soundness and stability of the islamic financial.
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