Islamic finance needs global sharia board - IDB president

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KUALA LUMPUR/SYDNEY: The Islamic Development Bank (IDB),
a Jeddah-based multilateral institution, has called for the creation of
a global sharia advisory board that can offer greater uniformity for
the Islamic finance industry, its president said on Thursday.
A
centralised format to the supervision of sharia-compliant banking
products is gaining favour across the globe, as regulators seek to
standardise industry practices and improve consumer perceptions.
"IDB
and IFSB (Islamic Financial Services Board) should study ways for
creating globally acceptable references for the industry for the
benefit of all," IDB president Ahmad Mohamed Ali said at a conference in Kuala Lumpur.
"This
could include striving for the concept of a globally accepted sharia
committee or body, which would be able to assist all Islamic financial
institutions and bring them in line with a uniform standard."
Malaysia
pioneered the country-level sharia board and in recent months several
countries have introduced central boards of their own, including Dubai,
Oman, Pakistan and Nigeria.
Countries like Oman have gone as far
as imposing term limits on the sharia scholars who are members of these
boards, while also requiring they abide by a code of conduct.
Islamic
scholars are experts in financial and religious law, but they are not
certified or accredited like other professions, so regulators are
increasingly developing ways to ensure the hiring of experienced and
financially literate scholars.
A global sharia board would also
allow the industry to address low penetration rates in majority Muslim
countries such as Pakistan, Indonesia, Turkey and Egypt where the
industry's share of banking assets remains below 10 percent.
A
global sharia board would provide a more structured approach to the
industry, which has its core markets in the Gulf and Southeast Asia.
"This
is very important as it gives a much needed structure to the industry,
thus enabling it to be more stable and allowing it to grow further,"
Ali added.
Ali also called for the IFSB to assist the IDB and
its member countries in providing technical assistance, while urging
the industry to focus on Islamic microfinance and youth employment.
The
IFSB is one of the main bodies setting standards globally for Islamic
finance, although national financial regulators have the final say on
their implementation and enforcement. - Reuters