Bridging The Gap Between Shariah Committee and Board of Directors of Islamic Banks (S/O 13727)

• Main Authors: Mohd Noor, Fauziah, Hussain, Mohammad Azam, Azhar, Alias, Md. Nor, Mohd Zakhiri
• Format: Monograph
• Language: English
• Published: UUM 2021
• Subjects: HG Finance
• Online Access: https://repo.uum.edu.my/id/eprint/30231/1/13727.pdf; https://repo.uum.edu.my/id/eprint/30231/

Shariah Committee is a key person in ensuring the Shariah compliant of Islamic banking business of Islamic banks. The establishment of Shariah Committee is pursuant to the requirement of Islamic Financial Services Act 2013 as well as Shariah Governance 2019 issued by Bank Negara Malaysia. Meanwhile the Board of Directors of Islamic bank also the key person to oversee the entire operation and activities of Islamic bank. The roles and responsibilities of these two bodies are crucial to the Islamic banking institution. In principle, the two bodies are to complement each other in securing the Shariah compliant of Islamic bank. However, due to several reasons, in reality there is a gap between the Shariah Committee and the Board of Directors in carrying out their roles and responsibilities in Islamic banking business. This study is carried out to achieve the following objectives: (a) To study the advantages and disadvantages of the appointment of Shariah Committee member as member of Board of Directors of Islamic banks; (b) To analyse the perception of Shariah Committee members in the appointment of them as a Board of Directors of Islamic banks; (c) To analyse the legal issues faced by Shariah Committee member who sit as a Board of Directors of Islamic banks; (d) To suggest a better alternative such as the appointment of an independent panel of consultant or advisory committee on Islamic banking matters. The doctrinal analysis is based on the statutory provisions and guidelines and data of thematic analysis is gathered from the interview of nine respondents. The finding shows the gap between Shariah Committee and Board of Directors of Islamic bank exists in several ways and several factors contributed to it. Among the three methods to be implemented in order to bridge the gap between them, it seems that the appointment of Shariah Committee member as a member of Board of Directors of Islamic bank is preferable compared to other two methods. Several steps need to be done in order to bridge the gap between these two significant bodies of Islamic banks.