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Best Practices for Internal Shariah Governance Framework: Lessons from Malaysian Islamic Banks

Asian Journal of Accounting and Governance

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Title Best Practices for Internal Shariah Governance Framework: Lessons from Malaysian Islamic Banks
 
Creator Abdul Aziz, Rosli
Abdul Rahman, Aisyah
Markom, Ruzian
 
Subject Shariah Governance Framework; Islamic Banking; Best Practices; Non-Compliance Risk; Shariah Committee
 
Description Comprehensive compliance to Shariah principles ensure confidence among stakeholders and strong credentials for the banking institutions. The Shariah Governance Framework (SGF) was introduced by the BNM in 2010 to safeguard Islamic financial institutions’ Shariah compliancy. Non-compliancy to SGF will pose risks to the banks and cause instability in the financial industry. This study explores the implementation of the internal SGF in selected Islamic banks. Document reviews and interviews were conducted to analyse the SGF documentations and practices. The banks’ practices are compared to the Guidelines on the Governance of Shariah Committee (GGSC) 2005 and the SGF 2010. Roles of major Shariah committees were reviewed with regard to the banks’ internal SGF compliancy to the SGF 2010. The findings indicate that the Islamic banks are generally compliant to the SGF 2010 provisions. The banks’ implementation of major Shariah organs has facilitated regulators in monitoring and mitigating Shariah non-compliancy events or risks. The most challenging issue faced by the Shariah audit team is limited resources in terms of on-the job work experience or Shariah knowledge. Thus, it is essential for Islamic banks to enhance their internal SGF within the scope of the SGF 2010 and collaborate with training agencies or higher education-related parties in addressing shortage of skilled manpower. 
 
Publisher Penerbit UKM
 
Contributor —
 
Date 2019-11-05
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://ejournal.ukm.my/ajac/article/view/35870
 
Source Asian Journal of Accounting and Governance; Vol 12 (2019): Asian Journal of Accounting and Governance
2180-3838
 
Language eng
 
Relation http://ejournal.ukm.my/ajac/article/view/35870/9923
 
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