30 December 2024

PR/029/2024

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Governance and Ethics Board (AGEB / the board) approved in its 37^th meeting the AAOIFI Governance Standard (GS) 18 “Shari’ah Decision-Making Process”.

This standard shall be read in conjunction with AAOIFI Shari’ah Standard (SS) 29 “Stipulations and Ethics of Fatwa in the Institutional Framework” and together, the two standards cover the overall process of obtaining and issuing a Shari’ah decision and its implementation.

This standard aims to set out a framework for Shari’ah Decision-Making (SDM), as a function in the institutions, and standardise the SDM practices across the globe. This standard addresses various significant aspects including but are not limited to key areas of the SDM process, significant considerations in SDM, product development process in institutions, as well as, roles and responsibilities of various organs of governance involved in SDM. It further sheds light on examples of psychological tendencies, as well as, key aspects of Maqasid Al-Shari’ah relevant to SDM in the context of institutions and key stages for the SDM process.

Mr. Farrukh Raza, chairman of AGEB mentioned that “Sound and rational decision-making is an integral part of modern financial management to achieve organisational goals effectively and systematically. I believe this governance standard will significantly safeguard the institution’s integrity and credibility in offering Islamic financial services and minimise the possibility of making a Shari’ah decision that may undermine the Shari’ah validity of a product, and hence, enhance the reputation of institutions and the industry as a whole”.

On this occasion, Mr. Omar Mustafa Ansari, Secretary General, AAOIFI stated that“I would like to extend my sincere appreciation to the board and relevant working group for their dedication and outstanding commitment”. He added that “We aim through our robust standards development process to ensure the issuance of high-quality standards. Therefore, three public hearings in English and one in Arabic language were held to obtain industry feedback and benefit from the knowledge and experience of industry stakeholders such as Shari’ah scholars, professionals, regulatory and supervisory authorities (RSAs) and academicians”.

AAOIFI GS 18 “Shari’ah Decision-Making Process” can be accessed by CLICKING HERE