New reg­u­la­tions for Is­lamic banks in Bahrain

Banking Frontiers - - Banking In The Gulf -

The Cen­tral Bank of Bahrain has is­sued fresh and com­pre­hen­sive reg­u­la­tions for Is­lamic banks in the coun­try. The reg­u­la­tions, is­sued af­ter ex­ten­sive con­sul­ta­tion with the in­dus­try and the Cen­tral­ized Shari’ah Su­per­vi­sory Board (CSSB), are ex­pected to re­sult in a paradigm shift in im­prov­ing the Shari’ah com­pli­ance and gov­er­nance stan­dards among Is­lamic banks and shall set proper bench­marks for global Shari’ah gov­er­nance prac­tices. The new reg­u­la­tions will be ap­pli­ca­ble from 30 June 2018 on all Is­lamic re­tail and whole­sale banks in Bahrain. For the first time, an In­de­pen­dent Ex­ter­nal Shari’ah Com­pli­ance Au­dit (IESCA) has been made manda­tory. The first IESCA re­port is to be is­sued in 2020 based on the trans­ac­tions, struc­tures and ac­tiv­i­ties of 2019. It marks a sig­nif­i­cant new step in in­de­pen­dent con­fir­ma­tion of whether Shari’ah gov­er­nance is em­bed­ded in the day to day func­tion­ing of an Is­lamic bank. Ac­cord­ing to Khalid Ha­mad, ED of Bank­ing Su­per­vi­sion at the cen­tral bank, the new Shari’ah Gov­er­nance mod­ule sets higher stan­dards of trans­parency, gov­er­nance and com­pe­tence for Is­lamic banks in Bahrain and it clar­i­fies the roles and re­spon­si­bil­i­ties of the man­age­ment and the board of direc­tors to­wards Shari’ah com­pli­ance.

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