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Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks

Comprehensive compliance to Shariah principles ensure confidence among stakeholders and strong credentials for the banking institutions. The Shariah Governance Framework (SGF) was introduced by the BNM in 2010 to safeguard Islamic financial institutions’ Shariah compliancy. Non-compliancy to SGF w...

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Main Authors: Rosli Abdul Aziz,, Aisyah Abdul-Rahman,, Ruzian Markom,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2019
Online Access:http://journalarticle.ukm.my/19180/1/35870-118967-1-PB.pdf
http://journalarticle.ukm.my/19180/
https://ejournal.ukm.my/ajac/issue/view/1225
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spelling my-ukm.journal.191802022-08-02T03:26:00Z http://journalarticle.ukm.my/19180/ Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks Rosli Abdul Aziz, Aisyah Abdul-Rahman, Ruzian Markom, Comprehensive compliance to Shariah principles ensure confidence among stakeholders and strong credentials for the banking institutions. The Shariah Governance Framework (SGF) was introduced by the BNM in 2010 to safeguard Islamic financial institutions’ Shariah compliancy. Non-compliancy to SGF will pose risks to the banks and cause instability in the financial industry. This study explores the implementation of the internal SGF in selected Islamic banks. Document reviews and interviews were conducted to analyse the SGF documentations and practices. The banks’ practices are compared to the Guidelines on the Governance of Shariah Committee (GGSC) 2005 and the SGF 2010. Roles of major Shariah committees were reviewed with regard to the banks’ internal SGF compliancy to the SGF 2010. The findings indicate that the Islamic banks are generally compliant to the SGF 2010 provisions. The banks’ implementation of major Shariah organs has facilitated regulators in monitoring and mitigating Shariah non-compliancy events or risks. The most challenging issue faced by the Shariah audit team is limited resources in terms of on-the job work experience or Shariah knowledge. Thus, it is essential for Islamic banks to enhance their internal SGF within the scope of the SGF 2010 and collaborate with training agencies or higher education-related parties in addressing shortage of skilled manpower. Penerbit Universiti Kebangsaan Malaysia 2019 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/19180/1/35870-118967-1-PB.pdf Rosli Abdul Aziz, and Aisyah Abdul-Rahman, and Ruzian Markom, (2019) Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks. Asian Journal of Accounting and Governance, 12 . pp. 37-49. ISSN 2180-3838 https://ejournal.ukm.my/ajac/issue/view/1225
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description Comprehensive compliance to Shariah principles ensure confidence among stakeholders and strong credentials for the banking institutions. The Shariah Governance Framework (SGF) was introduced by the BNM in 2010 to safeguard Islamic financial institutions’ Shariah compliancy. Non-compliancy to SGF will pose risks to the banks and cause instability in the financial industry. This study explores the implementation of the internal SGF in selected Islamic banks. Document reviews and interviews were conducted to analyse the SGF documentations and practices. The banks’ practices are compared to the Guidelines on the Governance of Shariah Committee (GGSC) 2005 and the SGF 2010. Roles of major Shariah committees were reviewed with regard to the banks’ internal SGF compliancy to the SGF 2010. The findings indicate that the Islamic banks are generally compliant to the SGF 2010 provisions. The banks’ implementation of major Shariah organs has facilitated regulators in monitoring and mitigating Shariah non-compliancy events or risks. The most challenging issue faced by the Shariah audit team is limited resources in terms of on-the job work experience or Shariah knowledge. Thus, it is essential for Islamic banks to enhance their internal SGF within the scope of the SGF 2010 and collaborate with training agencies or higher education-related parties in addressing shortage of skilled manpower.
format Article
author Rosli Abdul Aziz,
Aisyah Abdul-Rahman,
Ruzian Markom,
spellingShingle Rosli Abdul Aziz,
Aisyah Abdul-Rahman,
Ruzian Markom,
Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks
author_facet Rosli Abdul Aziz,
Aisyah Abdul-Rahman,
Ruzian Markom,
author_sort Rosli Abdul Aziz,
title Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks
title_short Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks
title_full Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks
title_fullStr Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks
title_full_unstemmed Best practices for internal Shariah governance framework : lessons from Malaysian Islamic banks
title_sort best practices for internal shariah governance framework : lessons from malaysian islamic banks
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2019
url http://journalarticle.ukm.my/19180/1/35870-118967-1-PB.pdf
http://journalarticle.ukm.my/19180/
https://ejournal.ukm.my/ajac/issue/view/1225
_version_ 1740826821472026624
score 13.211869

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