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The Role of the Shari'aa Board

The Shari'aa Board in a typical RF (Islamic) bank is responsible for overseeing the application of different aspects of the law (Shari'aa) in the RF bank or the financial institution.[1] The Shari'aa Board (sometimes called Shari'aa Supervisory Committee), in general, certifies every product, finance model, and service provided by the RF financial institution. It also ensures that all the transactions and operations are in strict compliance with the principles of the law.

The Shari'aa Board is comprised of experts in the research and development of religious rulings by applying the law to financial and banking products and operations. The Board also helps in devising, with the assistance of banking professionals, RF financing models that fit within and compete with modern-day riba-based banking. In some, but not all, RF (Islamic) banks, the Board is empowered with the right of issuing a contradicting religious edict (fatwa) to the position of the bank's board of directors regarding any of the products, services, and/or procedures that violate the law (Shari'aa), if such a violation were uncovered. Some RF banks' bylaws require that the board of directors be obligated to implement the fatwa(s) issued by the Shari'aa Board. In some banks, like the Dubai Islamic Bank, the fatwa is implemented irrespective of whether a unanimous or a majority of the board of directors consensus secures the decision (clause 78 of the Bank's Memorandum & Articles of Association).[2]

  • [1] Please visit the Dubai Islamic Bank website to read about the role of its Shari'aa Board (alislami.ae/en/shariaboard_boardrules.htm); also, read about the Islamic Bank of Britain: islamic-bank.com/islamic- banklive/RoleofCommittee/l/Home/l/Home.jsp.
  • [2] Ibid.
 
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