Principles of Islamic banking and finance/PIBF201/Islamic jurisprudence/Roles of Shariah

Shari’ah Supervisory Boards are one of the major components of Islamic banks and other Islamic financial institutions. Shari’ah boards have fiduciary responsibilities towards the institution’s stakeholders. They consists of prominent Shari’ah scholars and perform the following functions:

1. Provide fatwas (nonbinding but authoritative legal opinion) that certify permissible      financial products;

2.	Undertake Shari’ah audit to ensure products and services comply with guidelines;

3.	Calculate zakat (a kind of wealth tax religiously obligatory to all Muslims) payments;

4.	Dispose of non-Shariah compliant income or earnings;

5.	Provide advice to the bank on the distribution of income to shareholders or depositors/investment account holders.

6.	Provide guidance to the bank on its wider social role

For further information on Shari'ah boards please visit the following websites:

https://www.islamicbanker.com/education/shariah-supervisory-board http://www.financialislam.com/sharirsquoah-boards.html