AAOIFI’s Governance and Ethics Board (AGEB) has issued its Governance Standard for Islamic Financial Institutions (GSIFI) No. 8 ‘Central Shari’ah Board’, which also marks the issuance of 100 standards so far in areas of accounting, auditing, governance, ethics as well as Shari’ah over a span of 27 years since inception, characterized by landmark achievements and extensive efforts.
“This is a giant leap towards improvements in the overall Shari’ah governance and compliance environment for the broader Islamic finance industry. We hope that this standard will support the regulators in establishing uniform practices for establishing and operating Shari’ah boards at jurisdiction level and will help in streamlining the Islamic banking and finance practices, within and across jurisdictions in line with the tenets of Shari’ah” said Dr. Ishrat Hussain – Chairman of AGEB. “We have interacted with industry and regulators at a larger canvas for developing this standard. A survey with experts was conducted and public hearing sessions were held between April and July 2017 in Bahrain, United Arab Emirates, Turkey, and Pakistan in addition to the comments of a number of experts received in writing” he added.
The objective of this standard is to provide guidance and comprehensive foundations that would define key terms of reference and principles when establishing such boards. Although the standard encourages the creation of Central Shari’ah Boards (CSB) at national levels, the guidance provided would standardize the global regulatory practices in this respect. The standard also presents a country-level approach for regulating the Islamic Finance Industry within borders, including products, practices, operations, etc. It is expected that such CSBs shall adopt globally acclaimed AAOIFI’s Shari’ah standards to standardize the practices.
The standard provides detailed and comprehensive guidance on the definition, scope of work, responsibilities, appointment, composition, independence, terms of reference of a Central Shari’ah Board and other relevant issues.
The final draft can be accessed exclusively by the digital version (of AAOIFI standards) subscribers, and subscription can be attained, on the AAOIFI website: www.aaoifi.com