Home > Islamic Banking, Islamic Economy, Islamic Management, Uncategorized > Governance of Shari’a Committees in Islamic Banks

Governance of Shari’a Committees in Islamic Banks


Translated by http://www.trgmh.com
تمت الترجمة بواسطة موقع ترجمة

Introduction

Islamic economic institutions are the jewel of the recent age, after the usury-based economic institutions have spread all over the Muslim countries for a long period of time and left almost all of the people in financial crises that there is not any way to escape from. It also trapped them in the inviolability of usury which is forbidden by Allah Almighty in The Holly Qur’an.Allah Almighty Says” whereas Allah has permitted trading and forbidden Ribâ (usury)”(Al-Baqarah from ayah275).Usury has been also considered one the most forbidden things that leads to a fight against Allah and His messenger.Allah, praise be to Him, says:” O you who believe! Be afraid of Allah and give up what remains (due to you) from Ribâ (usury) if you are (really) believers. And if you do not, then take a notice of war from Allah and His Messenger. And if you repent, you shall have your capital sums .wrong not, and you shall not
be wronged”. (Al-Baqarah-Ayah 275-276).

Some recently published economic studies has indicated that there is around 300 financial institutions operating according to the Islamic Shari’a with funds that exceed 200 billion dollar in more than 50 countries in the world. This has given these institutions a major existence in the global banking system though they are not aged more than three decades. This fact stimulated some foreign banks to open Islamic sections in its usury-based banks. The committees of Fatwa and Shari’a Supervision are considered to be one of the main pillars of the Islamic Financial Institutions, and it represents a very important role in controlling the practices of these institutions in terms of Shari’a.
And due to the dumping of the Islamic world for a long time in this forbidden usury, a lot of people forgot about the Islamic economic system; to the extent that some thought there are no world economic systems other than the usury –based ones. This has made a lot of Muslims unaware of the basics and foundations of the Islamic economic system, especially those who climbed the management of the Islamic economic institutions. This has required that Muslim jurists should be aside with the leaders of the Islamic economy to guide them towards the right Islamic economic system, and to watch their business no matter how big or small before it’s executed fearing what the Islamic law has prohibited. Hence, the importance of the Shari’a supervision over the Islamic economic institutions appears to be important.

Due to the spread of science and facilitating the access to scientists and the diversity of means and speed, people are being eager to earn Halal, and because there are now a lot of new things, everyone who is a true believer, is yearning to know Allah’s rules concerning them; because the ignorance of Shari’a in Islam is not acceptable when there are a lot of specialists that people can refer to and would feel reassured to their fatwa. Since there are now many jurists and even more different opinions from them, many Muslims became at a loss because of multiple opinions on one subject heard on satellite channels, read on the newspapers and spread by media. In this lies great danger to Islam and Muslims from the dispersal of ideas and minds of the people without the laws of Shari’a; there are also some scholars who show leniency today towards rules that were once very clear on the ground of making things easier for people, conducting audits, spread of distress and life pressures; so the fatwa has become more like shopping festivals specially the ones that are heard from satellite channels.

The Shari’a Supervisory committee is a group of specialists who follow Shari’a to examine and analyze all the work, actions and transactions undertaken by Islamic banks to ensure that they are in accordance with the provisions of Islamic Shari’a.The committee uses appropriate and legitimate statements, showing errors and irregularities and correcting them immediately and reporting to stakeholders, including the comments, advice and guidance and ways of development. It has been a tradition that each Islamic economic institution has its own committee of accredited Shari’a supervisors, whose members are not less than three and often not more than seven. Their meetings should be periodical; sometimes weekly, monthly, and often, every three months in some cases, depending on need.

This committee takes different names such as: Shari’a supervisory committee, Fatwa committee and Shari’a committee. The Shari’a supervisory committee has become a main structure within any Islamic bank like the general assemblies, boards of directors and auditors.

Most of the Islamic banks have made sure to obtain reports from the Shari’a supervisory committee to certifying that it’s proceeding on the basis of Islamic Shari’a law and signed by the President of the Board and published with the audit reports to confirm the legitimacy of all its work.

The control of Shari’a law is essential and vital role in the light of the high prevalence of the Islamic banks in the Arab and Islamic world and the growing demand for Islamic transactions and the emergence of quality products and multiple versions of Islamic finance, as this requires a strong supervision able to follow the work of banks and the extent to which the knowledge of what is being done by the provisions of Islamic Shari’a.

However, there are some abuses that occur by the boards of banks which are imperative with the appointment of Shari’a committee by the General Assembly to ensure its independence and not to let the committee fall under the pressure of the administration.

The Shari’a committees have become at stake after demands which stresses the need to codify a number of fatwas issued by Islamic financial institutions , and identify it in the official bodies often follow the central banks in Islamic countries in particular.

In spite of many conferences and symposia related to Islamic banking and Islamic financial institutions, there were no explicit claims for the need of practical solution to consolidate all the fatwas instead of letting them differ from bank to another.Besides, some workers in the Shari’a committees often move from bank to another; they are sometimes co-members of the board or chairmen of the committee which makes the Islamic banking products are similar in the (analysis) and different in application.

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