The issue of the absence of a central Shariah banking supervisory body in the UAE has been brought to the fore again with Obaid Humaid Al Tayyer, the emirates’ minister of finance, questioned at the Federal National Council (FNC) level on the failure to set up such an authority.
Ali Eissa Al Nuaimi, an appointed member for the emirate of Ajman at the FNC, the federal authority of the UAE, has sent the finance minister a question on why a law issued in 1985 for the establishment of a legal commissioning body to supervise Islamic banks has yet to be implemented.
According to Article (5) of the UAE’s Federal Law no- (6) of 1985, governing Islamic banks, financial institutions and investment companies: “A higher Shariah authority shall be formed by a cabinet decision, incorporating Shariah, legal and banking personnel to undertake higher supervision over Islamic banks, financial institutions and investment companies to ensure legitimacy of their transactions according to the provisions of Islamic Shariah law, and also to offer opinion on matters which these agencies may come across while conducting their activities. The opinion of the said higher authority shall be binding on the said agencies. This authority shall be attached to the Ministry of Justice and Islamic Affairs.”
Ali Eissa was quoted as saying that: “The number of Islamic banks in the country through past years has continued to increase. We want to know what has happened to this law and the procedures that will be taken concerning it.”
Unlike other thriving markets for Islamic finance such as Bahrain and Malaysia, whose central banks have established a national Shariah board and a Shariah advisory council, respectively, the Central Bank of the UAE has not set up a body of its own to govern the emirates’ Islamic banking sector.
Scholars have long called for the creation of a central Shariah board; in an effort to create neutrality, transparency and standardization.
It now remains to be seen what steps will be taken to address the absence of such a board in the UAE.
source: Islamic Finance News