SHARĪ’AH SUPERVISORY BOARDS IN MALAYSIAN ISLAMIC BANKS: EMERGING ISSUES, CHALLENGES, AND RESPONSES
DOI:
https://doi.org/10.33102/mjsl.vol13no3.1080Keywords:
Islamic jurisprudence, Islamic law, Islamic banking, Islamic financial institution, Sharī’ah supervisory boards, liquidity management, MalaysiaAbstract
This study investigated the key challenges that Sharī’ah Supervisory Boards (SSBs) face while performing their duties in Islamic banking in Malaysia. These challenges included institutional, operational, legal, jurisprudential, and professional obstacles, which impede SSB members from carrying out their responsibilities and tasks effectively. A significant issue highlighted in the study is the shortage of experts in Fiqh MuꜤāmalāt (Islamic transactions jurisprudence), complicating the development of new financial products, exploring innovative Ijtihād (independent reasoning by an expert in Islamic law) trends, and discussing contemporary and emerging issues in Islamic finance. Given these challenges, the study aimed to analyze the hurdles facing SSBs and suggest solutions to address them. The study utilized both descriptive and analytical methods to understand the barriers and their link to directives issued by the Sharī’ah Advisory Council (SAC) of the Central Bank of Malaysia. Additionally, the study discussed the continuous evolution in the Islamic banking sector, which requires Sharī’ah rulings to adapt to changes in time and place through the expertise of well-informed jurists. The study’s key findings revealed a range of institutional, legal, operational, and jurisprudential challenges, with proposed solutions including strengthening the role of SSBs in banks, diversifying investment instruments, and encouraging Islamic financial engineering to create alternative Islamic banking products that align with Sharī’ah principles while meeting customer needs. These results offer valuable insights into the operation of Islamic banking in Malaysia and guide for addressing and resolving the challenges and difficulties encountered by SSBs.
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