By Bernardo Vizcaino
DUBAI, Sept 13 (Reuters) – A group of Islamic scholars is
proposing a fresh solution to charges that banks’ sharia boards
are open to conflicts of interest: create partnerships between
the boards and Muslim depositors, to insulate the boards from
pressure exerted by bank managements.
Sharia boards, composed of experts in Islamic financial law,
supervise Islamic banks’ activities and products to make sure
they conform to religious principles, such as bans on interest
and pure monetary speculation.
Traditionally, banks appoint prestigious scholars to their
sharia boards and pay them handsome fees and retainers. This has
left the system vulnerable to charges of conflict of interest:
the scholars are being paid by the institutions which they are
supposed to be supervising impartially.
A group of scholars in South Africa, led by Durban-based
Ebrahim Desai, a senior figure in the city’s Muslim community,
proposes that Muslim depositors in each bank fund a sharia
compliance body that would be created separately from the bank.
The body would then hire a sharia board to supervise the
bank. In this way, the scholars on the board would not be
appointed by or report to the bank’s management, and would not
have a direct financial relationship with the bank.
“We seek a neutral and balanced position,” Desai said by
telephone, adding that freed of subjection to bank managements,
sharia boards would be able to play more strategic and powerful
roles in governance.
“This would be in line with the larger interest of the
Muslim community in upholding sharia law by maintaining the
ultra-independence of the sharia supervisory board.”
Emraan Vawda, a colleague of Desai, argued that by their
nature, banks were ill-suited to policing their own Islamic
activities. “Commercial concerns in the overwhelming majority of
Islamic banks far outweigh genuine commitment to Islamic values
and precepts,” he said.
Continued…
