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.
Dr Ali Mohiyuddin Al Quradaghi, the secretary-general of the Qatar-based International Union of Muslim Scholars, and also the chairman of Supervisory Board of Al Hilal Islamic Banking Services, Ahlibank Oman asserted that this can be done through a unified body for fatwa (edicts) and Sharia supervision which should be affiliated to the central bank of each country and this body shall be the benchmark for the subsidiary bodies, and can be composed of the heads of Sharia entities within each country and/or other eminent scholars.
Despite the boom of Islamic finance in recent years, the shortage of experienced scholars in applying Sharia principles for Islamic finance is hindering the progress of the industry. Ali Al Quradaghi feels that the opening of schools of Islamic economics in the universities of the Sultanate has become an urgent necessity because of the scarcity of competent people specialised in Islamic banking, considering that the creation of such a talent pool will benefit the Islamic banking in the Sultanate.
“Members of the Sharia boards should be chosen from among those who are specialised in Islamic fiqh (jurisprudence) and Islamic economy and those who have experience in the field of Islamic banking and other Islamic financial institutions. The most notable challenge is the lack of human competent resources specialised in the field of Islamic banking. We can overcome this challenge by holding training courses, seminars on a permanent basis,” he said.
Pointing out the importance of issuing a unified law for Islamic banks, he said that the lack of uniform laws for Islamic banks may contribute to the creation of some of the problems that would result from different policies, standards and laws from one bank to another.
A strong believer that the risk management is actually better in Islamic banking than conventional banking. “There are serious academic studies which show that the risks in Islamic banks are less than those in conventional banks, including a thesis in the Faculty of Islamic Studies at Qatar Educational Foundation about this comparison, that was discussed in March 2012 and it proves that risk management is actually better in Islamic banking than conventional banking,” he added.
When asked, are you seeing a convergence on standardisation for Sharia interpretation and regulations, he said, “Sharia law allows to take advantage of all the beneficial technical aspects, and it essentially sets uniform standards to achieve equality, and thus there is a convergence of standardisation for the interpretation of Shariah law in its texts that can be subject to interpretative judgment, while the definitive texts as constants.”
Speaking about the most challenging aspect of Islamic finance, the top expert observed, “In my opinion, one of the biggest challenges facing the Islamic banking is the wrong applications, because it leads to loss of its credibility. Most people go to the Islamic banks because their contracts are legitimate and Sharia-compliant.”
“So, if they were found later to be not compatible with Sharia, this will be counterproductive. Therefore I recommend Islamic banks and branches to give priority to this aspect, and stay away from abnormal fatwas which do not serve the Islamic economy.”
What precisely are scholars doing when evaluating whether a particular transaction conforms to Islamic law, Ali Mohiyuddin Al Quradaghi said, “Usually the fatwa and Sharia supervisory boards do several tasks, the most important of which are the formulation of the contracts and tools which the banks need; reviewing the processes and budgets that take place within the institution, and the internal audit of the activities that take place in the bank under the Sharia rules.”
source: The Times of Oman