Guiding Principles for Shariah Governance
Yahaya Ismail Legal and Regulatory Issues in Islamic Banking and Finance Guiding Principles for Shariah Governance System Professor: Dr. Kazeem Yavari For Institutions Offering Islamic Financial Services (IFSB Standards) 25/05/2011
INTRODUCTION:
The Islamic Financial Service Board is an international financial organization. It was founded in 2003 and issues guiding principles and standards within the Islamic banking and financial sector. It aims to promote stability and order in the Islamic financial industry. It also aims to promote the awareness of Islamic financial services. Among its duties is the issuance of Shariah-compliant standards, and provision of guidance and supervision for Islamic Financial Institutions. The IFSB issued principles and standards regarding issues on Risk Management, Capital Adequacy Standards, Corporate Governance, Transparency and Market Discipline, Supervisory Review Process, Governance for Islamic Collective Scheme, Sukuk Securitization and Real Estate Investment, Takaful (Islamic Insurance) Undertakings, Conduct of Business, and Shariah Governance Systems1 for institutions offering Islamic financial services. The Board developed guiding principles in recent years to strengthen governance structures and processes in various segments of the Islamic financial services industry. These three guiding principles are Guiding Principles for Governance for Institutions offering only Islamic Financial Services (IFSB-3, 2006) Guiding Principles on Governance for Islamic Collective Investment Schemes (IFSB6, 2008) Guiding Principles on Governance for Takaful Operations (IFSB-8, 2009) In all three guiding principles, there were recurring issues of the functions of the Shariah boards2. Due to these recurring issues, the IFSB prepared other sets of guiding principles on Shariah governance system. The objectives of these guiding principles are to: I. Complement other prudential standards issued by the IFSB by focusing on the importance
INTRODUCTION:
The Islamic Financial Service Board is an international financial organization. It was founded in 2003 and issues guiding principles and standards within the Islamic banking and financial sector. It aims to promote stability and order in the Islamic financial industry. It also aims to promote the awareness of Islamic financial services. Among its duties is the issuance of Shariah-compliant standards, and provision of guidance and supervision for Islamic Financial Institutions. The IFSB issued principles and standards regarding issues on Risk Management, Capital Adequacy Standards, Corporate Governance, Transparency and Market Discipline, Supervisory Review Process, Governance for Islamic Collective Scheme, Sukuk Securitization and Real Estate Investment, Takaful (Islamic Insurance) Undertakings, Conduct of Business, and Shariah Governance Systems1 for institutions offering Islamic financial services. The Board developed guiding principles in recent years to strengthen governance structures and processes in various segments of the Islamic financial services industry. These three guiding principles are Guiding Principles for Governance for Institutions offering only Islamic Financial Services (IFSB-3, 2006) Guiding Principles on Governance for Islamic Collective Investment Schemes (IFSB6, 2008) Guiding Principles on Governance for Takaful Operations (IFSB-8, 2009) In all three guiding principles, there were recurring issues of the functions of the Shariah boards2. Due to these recurring issues, the IFSB prepared other sets of guiding principles on Shariah governance system. The objectives of these guiding principles are to: I. Complement other prudential standards issued by the IFSB by focusing on the importance