Islamic finance : laying down an overarching schema for value based shariah advisory and governance framework

Abstract EN

The fast growth of Islamic Finance has simuitaneousiy exposed the weaknesses in the system as being apphed.

The products have evolved as repiication of the conventional products without any iinkage with maqàsid al-shariah.

Conformation of many products to the tenets of the shariah is doubtfui even in letter, of sure devoid of the spirit.

There are concerns on shan'ah advisoiy, comphance and the regulatory systems as applied at national and the global levels.

The countries like Malaysia and Pakistan and a few professionals from UK and UAE have lately taken some initiatives to introduce reforms in the related area, yet a lot more needs to be done to strengthen the underlying value system and the aspect of shariah compliance - the focal determinant for sustainable development of Islamic financial system.

This paper suggests structural reforms for strengthening the value system at the shariah committees and regulatory levels to upkeep the integrity and credibility of the most respectful and crucial stakeholder of the Islamic finance - the shariah scholars and hence the system.

Introducing a well-planned reguiatory system and removing / managing the ‘conflict of interests’ in die structure of shariah supervision are the necessary steps to be taken with ultimate objective to achieve maqàsid al-shariah.

Establishment of Associations of shariah Advisors at national levels and a Global Commission on shariah Advisory at global level may help in resolving many related issues.

The standards setting institutions, regulatory bodies and the shariah scholars have to make joint efforts in this regard