The Islamic banking and finance industry has witnessed notable development in recent times and has demonstrated its capacity to withstand the financial crisis currently confronting the world. This indicates that it represents an appropriate option, or an effective alternative, to the conventional financial and banking system that most global financial institutions are affiliated with. Nevertheless, there is no doubt that Islamic banking has been somewhat affected by the crisis, though it has not suffered any direct harm or significant losses. Rather, it has been affected only by prevailing market conditions, since Islamic banking operates within the same market as conventional banks—an unavoidable reality. Yet the positive aspect of the crisis is that the strength and effectiveness of Islamic banking have become evident to all, which serves as proof that the Islamic financial system will endure and that it has a promising future for further advancement.
What we witness today also constitutes clear evidence of the flexibility of this Sharīʿah, its suitability for every time and place, and its capacity to provide the appropriate solutions. Undoubtedly, it represents the best system for human life. This commendable initiative began long ago and underwent remarkable and rapid development in the 1970s. Islamic financial institutions began to emerge successively across the world up until the present day in various forms—Islamic banks, takāful companies, and Islamic investment firms—providing financial services to the public. The development of this field has been supported by Sharīʿah experts, consultants, business professionals in Islamic banks, and others, all of whom have exerted commendable efforts to ensure that the operations and earnings of these institutions are Sharīʿah-compliant and lawful, in contrast to conventional financial institutions.
It is worth emphasising that all Islamic financial institutions must ensure that every operation and financial product conforms to the established principles and requirements of the Sharīʿah. Any negligence in this regard would lead to the collapse of the Islamic financial institution, which fundamentally rests upon the trust and confidence of its clients and depositors. For this reason, Islamic financial institutions have established Sharīʿah supervisory boards or appointed Sharīʿah supervisors who function as intermediaries between stakeholders—whether clients, shareholders, depositors, or the institution itself—in ensuring that all operations and earnings are Sharīʿah-compliant (Abomouamer, 1989, p. 366). These boards or supervisors provide guidance and direction to the institution from a Sharīʿah perspective, examine and monitor ongoing operations, and undertake correction, amendment, or advisory action where deviations from Sharīʿah occur. They also attest to and certify, before the general assembly, the matters that conform to Sharīʿah.
Like any other supervisory body within a bank, the Sharīʿah supervisory board must possess certain essential attributes—foremost among them independence and binding authority over the bank’s management—in order to perform its role effectively. Accordingly, the Sharīʿah supervisory board constitutes one of the fundamental pillars of the Islamic financial system and, indeed, one of the features that distinguishes the Islamic system from the conventional. It represents an effective instrument and a principal mechanism for ensuring that Islamic financial institutions operate in accordance with Sharīʿah principles, thereby securing public trust, confidence, and commitment to the Islamic financial system.
