Dubai: Gulf states are working towards the creation of a single Sharia board for the region's Islamic financial institutions, said Hussain Hamed Hassan, head of Dubai Islamic Bank PJSC's Sharia committee and chairman of the Sharia Coordination Committee of the Islamic Financial Institutions in the UAE.
Speaking at the launch of Hawkamah Institute's policy brief on corporate governance of Islamic banks and Islamic financial institutions, Hassan said creation of a supreme Sharia council will help in co-ordinating the rulings of various Sharia councils and supervisory boards in the region and will reduce the possibility of differences.
The policy brief highlights the improvements required in the corporate governance of Islamic banks and financial institutions in Mena. It considers international practices and standards developed by various Islamic finance standard setting bodies in the light of the global fin-ancial crisis.
"The regulation of Islamic finance needs to be aligned with the regulation of conventional finance to the maximum extent while remaining consistent and compliant with Sharia requirements," said Dr Nasser Saidi, Executive Director of Hawkamah.
The policy recommendations contained in the brief are aimed at improving the corporate governance regime in Islamic banks and financial institutions and are based on a Mena wide survey carried out by Hawkamah's Task Force on Corporate Governance of Islamic Banks and Financial Institutions.
The task force members consist of experts in the area of Corporate Governance in Islamic Finance, Islamic Finance standard setting bodies, and IFIs from across the Mena region.
Islamic finance expanded from $137 billion (Dh503 billion) in total assets in 1996 to over $1 trillion in 2010. The amount is forecast to reach $5 trillion by 2015.
As the industry is poised for strong growth, the Hawkamah's Task Force members said publication of the policy brief is the first step towards bridging the corporate governance gap in the Islamic finance sector in the Mena region.
While the governance policy brief is addressed to policy makers, Islamic banking regulators, banking associations and Islamic banks and financial institutions in the Mena region and the global corporate governance community interested in Sharia compliant financial institutions, Hawkamah is also working on standardisaton of sukuk issues and creation of educational programmes to train professionals.
"Markets need standardised instruments. If the instruments are not standardised this would mean higher transaction costs and overall costs of entry into the industry. We have created a template for sukuk documentation when International Finance Corporation issued a $100 million sukuk two years ago. We are further fine tuning it to become an international template," said Dr Saidi.