National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
211
Existence of an independent national Shariah body can help harmonize the Shariah rulings and
minimize diversity of fatwas that introduces legal and reputational risks. The national Shariah
board can either be established by the regulators or by the religious ministry. There can be a
separate Central Shariah Board for different financial sectors or one central board that deals
with all sectors. One of the roles of the national level Shariah board is to come up with Shariah
parameters or standards for different Islamic financial products. This will add to the
harmonization of Islamic financial practices within the jurisdiction and also reduce the costs of
Shariah governance at the organizational levels.
Table ‎7.3: Shariah Governance Framework
No. Recommendations Specific Steps Implemented by
3.1 Legal/Regulatory
Requirement for
Shariah Governance
(SG)
 Shariah governance framework
included in Islamic financial laws
 Regulatory framework for SG in
Islamic banks
 Regulatory framework for SG in
Takaful
 Regulatory framework for SG in
Islamic capital markets
 Government (Ministry of
Law/ Legal Affairs)
 Banking sector regulator
 Insurance/Takaful sector
regulator
 Capital markets regulator
3.2 Central Shariah
Advisory Board
(CSAB)
 CSAB for Islamic banking sector
 CSAB for Takaful sector
 CSAB for Islamic capital markets
 Government (Ministry of
Religious Affairs)
 Banking sector regulator
 Insurance/Takaful sector
regulator
 Capital markets regulator
3.3 Developing Shariah
parameters/
standards
 Shariah parameters/ standards
for Islamic banking sector
 Shariah parameters/ standards
for Takaful sector
 Shariah parameters/ standards
for Islamic capital markets
 CSAB for Islamic banking
sector
 CSAB for Takaful sector
 CSAB for Islamic capital
markets
7.1.4. Liquidity Infrastructure
The liquidity infrastructure can be strengthened by providing the instruments, markets and
the facilities that Islamic financial institutions can tap into in case they need them. This would
require developing and issuing Shariah compliant liquidity instruments that Islamic financial
institutions can use either to place surplus funds or acquire funds when necessary. These
liquidity instruments can be issued either by the government or financial institutions. Note
that the government bodies have to come up with Shariah compliant liquid instruments that
satisfy conditions of High Quality Liquid Assets of the new Basel III liquidity requirements.