Foundations of Shari'ah Governance of Islamic Banks

Chapter 5The Sharī‘ah Supervisory Board

Chapter Summary

This chapter addresses the Sharī‘ah Supervisory Board (SSB) from both a theoretical and a practical perspective. It elaborates on the definition of an SSB, the multiple titles used for this entity, as well as its importance and purpose. Moreover, it delves into the history of SSBs in modern Islamic banking. The work of any SSB cannot be diligently accomplished without taking precautions to protect its independence, objectivity, confidentiality, consistency, and disclosure. These governance guidelines are explained and their practical implications on the SSB are highlighted. Next, the discussion focuses on the location of the SSB within the organizational chart, its reporting structure, and the accountability of its members. This is followed by a detailed exploration of different SSB models found in practice and illustration by way of examples. Finally, the possibility of a future without SSBs is considered.

5.1 The Sharī‘ah Supervisory Board Defined¹

Scholars have adopted varying perspectives regarding the functions of the SSB. Some see the SSB to be an advisory board that plays an integral role in monitoring sharī‘ah compliance, while others view its role to be much greater than that. In the view of Briston and El-Ashker, the SSB is a control instrument for monitoring sharī‘ah compliance, ensuring that contracts and activities are compliant, and that zakat obligations are fulfilled.² The Accounting and Auditing Organization ...