The Islamic Development Bank (IDB), a Jeddah-based multilateral institution, has called for the creation of a global sharia advisory board that can offer greater uniformity for the Islamic finance industry, its president said on Thursday.

A centralised format to the supervision of sharia-compliant banking products is gaining favour across the globe, as regulators seek to standardise industry practices and improve consumer perceptions.

It may be an unusual career move, but becoming a shariah scholar for an Islamic bank is nice work if you can get it. A quick poll of bankers, lawyers and academics working in Islamic finance revealed unanimous agreement that shariah scholars — who approve every new Islamic banking transaction to certify its compliance to Islamic shariah law — are paid ‘a lot’, but few volunteered figures. Welcome to the opaque world of Islamic finance, and the fledgling industry’s ‘scholar problem’.

Morocco's central bank has started talks with a body of Islamic scholars on establishing a central sharia board to oversee the country's fledgling Islamic finance industry, a central bank official said.

The board, composed of scholars and financial experts, would rule on whether instruments and activities complied with sharia principles. Its creation would be a step towards establishing full-fledged Islamic banks in Morocco.

After at least five years of delays, Islamic finance experts in Saudi Arabia and Malaysia are renewing efforts to create common regulations for scholars.

Malaysia’s International Shariah Research Academy for Islamic Finance is working with its Middle Eastern counterpart on guidelines that will address the number of boards on which scholars can sit to reduce conflicts of interest, according to Executive Director Mohamad Akram Laldin in Kuala Lumpur. An institution will also be established to provide global accreditation, said Akram, who helped set up a body last year to oversee advisers’ activities in the Southeast Asian nation.

As investors looked on in dismay at the 2009 default of Islamic bonds from Saudi Arabia to Kuwait, many critics forecast the demise of the Gulf’s sharia-compliant industry.

Islamic bond structures were seen as too complicated and too far removed from the real economy. While financial instruments appeared to be based on collateral, they turned out to be just like any other conventional product.

The United Arab Emirates needs a centralized body for the Islamic finance industry to help develop its sukuk market further, a top central bank official said on Wednesday.

Saif al-Shamsi, assistant governor for monetary policy and financial stability, said the law calls for a central sharia committee at the federal level that would work with sharia boards at the corporate level but that has not been implemented yet federally. 

Dr Ali Mohiyuddin Al Quradaghi, one of the top sharia scholars in the Gulf Cooperation Council (GCC) on Islamic finance, has mooted the need for the establishment of an institution that could certify and standardise the different Islamic products in the market.