Shari’ah Governance of Islamic Banking Institutions in Pakistan: An Analytical Overview
Volume 6, Issue 6 Sahibzada Muhammad Wasim Jan
Published online:22 December 2020
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Shari’ah governance is the arrangement that provides legitimacy to the business of Islamic Banking Institutions (IBIs) because the concept of Shari governance requires that all business affairs of IBIs must be conducted according to Shari’ah rules and principles under the Shari’ah supervision. The research is formulated to overview the current and the previous regulatory arrangements of SBP for Shari’ah governance of IBIs and analyze the institutional arrangement for Shari’ah governance, which is a vital part of the Shari’ah governance practice of the Pakistani IBIs. Applying a descriptive methodology, the research has investigated the current practice of Shari’ah governance depending on the regulatory guidelines and standards issued by the SBP and the literature on the topic. The research has discovered that the Shari’ah governance of IBIs in Pakistan has been formulated and implemented significantly by SBP. At the industry level, the composition and functions of Shari’ah boards require some regulatory enhancements to safeguard the credibility and marketability of Shari’ah governance of IBIs. The research implies that Shari’ah boards must have additional members qualified for the position and their functions should be comprehensive, and their performance should be assessed so it could cater to the business needs of IBIs.
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