On the Merits of Malaysia’s Shari’a Supervisory and governance framework
Malaysia’s Shari’a supervisory and governance framework for Islamic banking and finance seems to hold more integrity compared to that of some other Muslim countries where each individual financial institution is responsible to seek, implement and adhere to fatwas that guide their operations.
In Malaysia, fatwa issuance and approval of Islamic banking and takaful products is required at two levels: at the financial institution by its Shari’a committee, and secondly at the apex level by Bank Negara Malaysia’s Shari’a Advisory Council (SAC). Islamic capital market products passed by the Shari’a committees of financial institutions will have to be approved by the apex Shari’a Advisory Council of Securities Commission Malaysia.
Bank Negara Malaysia and the Securities Commission are the two regulatory bodies committed to ensuring the Shari’a-compliance of Islamic financial products and activities. Malaysia’s practice seems to hold more integrity compared to that of some other Muslim countries, where each individual banking/financial institution is responsible to seek, implement and adhere to fatwas that guide their operations.
Why is it not sufficient to have only one central Shari’a supervisory body at the regulatory level?
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Assoc. Prof. Dr. Azman bin Mohd Noor is currently lecturer in Islamic Jurisprudence and Islamic Finance at the Department of Fiqh and Usul al-Fiqh, International Islamic University of Malaysia. He completed his degree in Islamic Law in 1997 at Islamic University of Madinah, Saudi Arabia. He did his MA in Islamic Criminal Law in 2000 at University Kebangsaan Malaysia (National University of Malaysia) and another MA in Muamalat (Islamic Law of Transactions) in 2001 at Department of Fiqh and Usul al-Fiqh, International Islamic University Malaysia. He obtained his Ph.D in Islamic Law in 2005 at University of Edinburgh, Scotland. His areas of interests include Islamic law of Transactions, Islamic Banking and Capital Market, Takaful and Retakaful, Zakat Management and Calculation. He has been supervising MA and Phd students in the field of Islamic Banking and Capital Market at Department of Fiqh and Institute of Islamic Banking and Finance, IIUM since 2006.