Foundations of Shari'ah Governance of Islamic Banks (ePub)

A practical guide for robust shari'ah governance of
the Islamic banking industry

Debate in the market on the extent of shari'ah
compliance of Islamic banks, their products, and activities has
piqued stakeholders' interest. In Foundations of Shari'ah
Governance of Islamic Banks, Karim Ginena and Azhar Hamid
explore the depths of shari'ah governance to unravel
its mysterious dimensions, and equip academics and practitioners
with a solid understanding of the subject, which has become a
serious challenge and thus deserves dedicated attention.

The authors make a strong case for the need to contain the
shari'ah risk that Islamic banks experience, and
present a compelling argument for how this should be done. Ginena
and Hamid propose a robust shari'ah governance model
that comprehensively tackles thisrisk, and helps improve the extent
of shari'ah compliance of market players. The authors
detail the internal, external, and institutional arrangements
needed to promote responsible shari'ah governance, and
critically analyze current laws, regulations, and industry
practices on the topic. The chapters of the book do the
following:

* Examine the roots, characteristics and objectives of
shari'ah and its relation to financial dealings;

* Probe the role of regulators in shari'ah
governance, explore the different approaches adopted by banking
supervisors, and provide examples of relevant legal and regulatory
measures;

* Explain to bank directors and management the fiduciary duty
they assume with respect to shari'ah compliance, and
detail how they could discharge this responsibility in line with
best practices;

* Elaborate on the purpose of the Shari'ah
Supervisory Board (SSB), its responsibilities, competence criteria,
internal regulations, and key governance guidelines; additionally,
they explore different SSB models;

* Describe the internal shari'ah control system
including its six components, and examine the internal
shari'ah audit function as well as different stages of
conducting a shari'ah audit;

* Clarify the role of a shari'ah auditor, with
guidance on reporting lines, scope of duties, authority, and
practical ways on fulfilling tasks, such as a sample
shari'ah risk assessment grid and audit
checklists;

* Discuss the newly emerging external shari'ah
advisory firms that are expected to play a key role in the coming
years and the services they provide.

Through an effective treatment of each of these elements, and
the way that they interact with one another, the book offers a
fresh take on how robust shari'ah governance of Islamic
banks can be successfully accomplished. It is a comprehensive
resource for academics, regulators, directors, lawyers, auditors,
consultants, employees, and customers of Islamic banks interested
in learning more about these challenges. This essential reading
persuasively extends the discourse on the subject and addresses
critical shari'ah issues that have policy implications
for decision makers in jurisdictions aiming to attract the
fast-growing Islamic finance industry or increase their market
share.