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null Outcomes of the Third Roundtable Meeting between Centralised Shariah Advisory Authorities in Islamic Finance

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Outcomes of the Third Roundtable Meeting between Centralised Shariah Advisory Authorities in Islamic Finance

3 Jan 2022 | Monday source : Bank Negara Malaysia

Bank Negara Malaysia (BNM) hosted the Third Roundtable Meeting between Centralised Shariah Advisory Authorities in Islamic Finance (CSAAs)[1] on 21 December 2021. The meeting was held virtually and participated by more than 50 delegates from 16 countries[2] and three standard-setting bodies[3].

The meeting was chaired by the Chairman of the BNM Shariah Advisory Council, Tan Sri Dr. Mohd Daud Bakar. It aims to further strengthen connectivity and foster mutual respect among Shariah boards at both central bank and national levels.

The following outcomes were highlighted during the meeting:

  1. Given the important role of CSAAs in mainstreaming Islamic finance, having a broader picture on Islamic finance development in their countries is critical. This mainly include industry-wide issues which could not be resolved by individual Islamic financial institutions (IFIs) and their respective Shariah boards. Such areas include providing Shariah guidance in navigating through any unprecedented crisis, developing Shariah parameters on rectification of Shariah non-compliant (SNC) events and incomes, as well as promoting the best ethical behaviour among Shariah board members and management of IFIs in preserving the Shariah sanctity of their operations
  2. CSAAs should strive to build greater coordination with other regulators and Governments in driving future-proof initiatives for the Islamic finance industry. It is critical for CSAAs to address challenges including those arising from misalignment of regulatory frameworks with Shariah principles. For example, to address the impact of climate change, CSAAs can collaborate with the Government and other relevant regulators to issue a national green framework that is consistent with Shariah principles. CSAAs may also guide regulators in enhancing laws and regulatory policies to suit the development of their respective Islamic finance industry.
  3. On Shariah governance, the meeting acknowledged the importance of a sound framework to ensure quality Shariah boards in terms of behaviour, duty of care and attitude towards fulfilling their mandates. The meeting also recognised the key roles of a competent Shariah Secretariat in supporting the effective functioning of its Shariah advisory board, at both national and institution levels.
  4. The meeting agreed for more focus to be given on key strategic issues, maqasid Shariah and action-oriented commitments in supporting sustainable finance for future meetings.

[1] The CSAA is established to deliberate on Shariah matters in Islamic finance. Each country adopts a different model and approach in establishing their respective Shariah advisory authority, to commensurate with the size and complexity of its Islamic finance industry as well as the local custom. The role of the Shariah advisory authority has been pivotal in preserving the Shariah sanctity and public confidence on Islamic financial transactions, creating a conducive environment for the industry to innovate and grow.

[2] Afghanistan, Algeria, Bahrain, Bangladesh, Brunei, Djibouti, Indonesia, Kuwait, Libya, Malaysia, Maldives, Morocco, Nigeria, Pakistan, Turkey and United Arab Emirates.

[3] Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), General Council for Islamic Banks and Financial Institutions (CIBAFI) and Islamic Financial Services Board (IFSB).