The Centralisation Debate of Islamic Banks’ Sharia' Boards – A Worthy Cause?
2015; RELX Group (Netherlands); Linguagem: Inglês
ISSN
1556-5068
Autores Tópico(s)Islamic Finance and Banking Studies
ResumoThe raison d'etre of this paper is to supply basic insights into the principle of Shura in Islamic Banking; the idea of a centralised Sharia' governance system, i.e. the centralised Sharia' board, as the highest authority on Sharia' issues pertaining to Islamic Banking in a country; its distinguishing features than that of a de-centralised system, i.e. the Sharia' board at the individual IFI level; and the pros and cons of the two said governance systems. These were analysed by referring to the provisions of the Holy Quran and the Sunnah, Ijma’ (consensus) of Sharia' scholars, and recent reports on the Islamic Banking industry as a whole. Despite the fact that the double-digit growth of Islamic Banking appears to be a promising sign towards the current US$ 2 trillion industry and further expected to cross the US$ 6.5 trillion mark by 2020, there remains concern over the lack of standardisation on adopted governance standards among IFIs across key regions such as Qatar, Indonesia, Malaysia, Bahrain, Saudi Arabia, United Arab Emirates, Pakistan, etc. Correspondingly, there has been much debate surrounding the issue of whether the Islamic Banking industry requires a centralised Sharia' board at the state level to complement the Sharia' boards at IFIs’ individual level. The fact that the industry is already equipped with two prominent standard-setting agencies in the form of the AAOIFI and the IFSB does little to suggest that best governance practices, which centres around the theme of consistency, harmony and uniformity, are on the horizon; at least not whilst their issued standards and guidelines remain voluntary to IFIs. All in all, it is aspired that this paper may assist the reader in evaluating the pros and cons of the whole concept of Sharia' board centralisation. Insha’Allah (God’s willing).
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