Shari’ah Committee Composition in Malaysian Islamic Financial Institutions: Post Implementation of SGF 2010 and IFSA 2013

Authors

  • Muhd Issyam Itam@Ismail International Islamic University of Malaysia
  • Rusni Hassan International Islamic University of Malaysia

Abstract

Shari’ah Governance is what makes Islamic Financial Institution (IFI) different from the Conventional Financial Institution. The primary aim of Shariah Governance is to ensure that the operation, practice, instrument, product and management of the IFIs are compliant with the Shari’ah principles at all times.  The Shari’ah Governance framework has been outlined in several standard and guideline issued by various bodies and organizations. At the global level, it has been issued by IFSB and AAOIFI, while in Malaysia specifically, it has been provided by Bank Negara Malaysia (BNM) through the Shari’ah Governance Framework 2010 (SGF 2010) and the newly implemented Islamic Financial Service Act 2013 (IFSA 2013). Acknowledging the significant role played by Shari’ah Committee in an IFI’s Shari’ah Governance framework, all of the standards, guidelines and regulations mentioned above provide many provisions with regard to the Shari’ah Committee in order to enhance their role and strengthen their position in the Islamic Finance industry. In this paper, focus will be given on two specific requirements, which are the requirement of qualification background of a Shari’ah Committee and the minimum number of Shari’ah Committee that must be appointed by an IFI. This paper will also discuss the gap between the requirements as provided by AAOIFI, IFSB, SGF 2010 and IFSA 2013, and what is the practice of the IFIs in applying these requirements.

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Author Biographies

Muhd Issyam Itam@Ismail, International Islamic University of Malaysia

Academic Trainee,

IIUM Institute of Islamic Banking and Finance

Rusni Hassan, International Islamic University of Malaysia

Associate Professor

IIUM Institute of Islamic Banking and Finance

References

Malaysia, B. N. (2010). Shari’ah governance framework for Islamic financial institutions. Bank Negara Malaysia, Kuala Lumpur.

AAOIFI. (2005). Governance Standards for IFIs, No 1-5. Bahrain AAOIFI

IFSB. (2009). Guiding Principles on Shari’ah Governance System in Institutions Offering Islamic Financial Services. Kuala Lumpur: IFSB.

Hasan, A. B., & LAWS, A. I. K. O. (2007). Optimal Shariah Governance in Islamic Finance. Islamic Finance News, 4(14), 7.


STATUTES
Islamic Banking Act 1983
Banking and Financial Institutions Act 1989
Islamic Financial Services Act 2013
Central Bank Act 2009


ANNUAL REPORTS

Affin Islamic Bank Berhad Annual Reports 2012-2014
Alliance Islamic Bank Berhad Annual Reports 2012-2014
Al-Rajhi Banking and Investment Corporation (Malaysia) Berhad Annual Reports 2012-2014
Ambank Islamic Berhad Annual Reports 2012-2014
Bank Islam Malaysia Berhad Annual Reports 2012-2014
Bank Muamalat Malaysia Annual Reports 2012-2014
CIMB Islamic Bank Berhad Annual Reports 2012-2014
Hong Leong Islamic Bank Annual Reports 2012-2014
HSBC Amanah Malaysia Berhad Annual Reports 2012-2014
Kuwait Finance House (Malaysia) Berhad Annual Reports 2012-2014
Maybank Islamic Berhad Annual Reports 2012-2014
OCBC Al-Amin Bank Berhad Annual Reports 2012-2014
Public Islamic Bank Berhad Annual Reports 2012-2014
RHB Islamic Bank Berhad Annual Reports 2012-2014
Standard Chartered Saadiq Berhad Annual Reports 2012-2014

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Published

2016-11-07

How to Cite

Itam@Ismail, M. I., & Hassan, R. (2016). Shari’ah Committee Composition in Malaysian Islamic Financial Institutions: Post Implementation of SGF 2010 and IFSA 2013. Journal of Islamic Finance, 5(2), 028-036. Retrieved from https://journals.iium.edu.my/iiibf-journal/index.php/jif/article/view/143

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Articles