Islamic banks : an overview of legal, regulstory and supervisory frameworks

Abstract EN

This paper aims to identify challenges faced by regulatory and supervisory agencies regarding Islamic banking, to develop a better understanding of Islamic banks (IBs) and to provide policy recommendations to enhance the supervision of IBs.

In light of the risks experienced by IBs, the article states that they need: A sound legal, corporate and regulatory framework; which is a key precondition for a safe development of Islamic Bank (IB).

They also need developing a better understanding of Islamic banking, providing policy recommendations to enhance the supervision of IBs, adoption of Shari'ah law standards across jurisdictions, creating an effective, efficient and robust regulatory structure, implementing the AAOFI, IFSB and Basel II legal and regulatory standards.

In addition, the creation of Islamic financial benchmark and Shari'ah harmonization with existing legal and policy frameworks.