Shariah governance practices at Islamic banks in Pakistan
A significant challenge facing the Islamic banking industry in Pakistan is the scarcity of qualified Shariah scholars. Due to scarcity, the regulatory body in Pakistan has allowed Shariah Board members to serve in the Shariah Boards of up to three Islamic financial institutions. Does this create a conflict of interest as confidential corporate information may inadvertently be communicated across banks, impacting competitive advantage, or even worse, revealing private data? The situation requires a closer focus, especially when two out of three Shariah scholar members in the regulatory Shariah Advisory Committee (SAC) of State Bank of Pakistan (SBP) serve on multiple Shariah Boards of Islamic banks. This study investigates the challenges in Shariah Board appointment in Pakistan, with a focus on talent scarcity and recommendations to support the industry in resolving these issues. We also explore if the composition of Shariah Boards and the criteria for appointment of its members is adequate. Further, since Shariah Board members are financially remunerated by their respective Islamic financial institutions, the study also researches the issue of impaired independence and lack of objectivity in passing Shariah rulings by Shariah Boards.
Islamic banks , Shariah governance , Pakistan , Project paper eMIF
Shabbir, G. (2021). Shariah governance practices at Islamic banks in Pakistan (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/3640