Sharia Laws & Governance
Shari’a governance is the most important feature of Al Hilal Islamic Banking Services Ahli Bank S.A.O.G. (the ‘Bank’) as it distinguishes it from the conventional counterpart. Shari’a governance is defined as a system whereby the Bank attempts and abides by the Shari’a principles in all its activities. The main objective of Shari’a governance framework is to ensure Shari’a compliance at all the times and at all levels and that is to enable the Bank to be acknowledged as fully Shari’a compliant by all aspects.
The key elements of Shari’a governance framework of the Bank are as follows:
Shari’a Supervisory Board
Shari’a Compliance and Audit
Responsibility of the SSB
The SSB is the ultimate authority within the Bank for all Shari’a related matters. It ensures, through a comprehensive Shari’a compliance and audit mechanism that the Board verdicts and Fatawa are strictly adhered to. In this regard the SSB is assisted by a fully fledged Shari’a Compliance and Audit Department.
The SSB reviews product papers, structures, policies and legal agreements and endorses their Sharia compliance. It gives Sharia decision on the matters/issues relating to all banking matters. The SSB prepares an annual report about Shari’a compliance of the Bank for the shareholders (to be read at the annual general meeting) and submits its copies to the Board of Directors and management. The report contains the SSB opinion with regard to the following points:
- Whether the Bank has complied with the Shari’a rules and principles in its contracts, transactions, accounts and dealings and adhered to the pronouncements issued by the SSB.
- Whether the income calculation and profit distribution mechanism has been examined for the appropriateness of the basis of allocation of profit between the equity holders and the investment account holders.
- Whether the earnings which were declared as non-Shari’a compliant have been set aside in a charity account which is under the supervision of the SSB.
- A statement mentioning that the Bank’s Board of Directors and management are responsible for executing the pronouncements issued by the SSB.
- An opinion on the overall Shari’a compliance of the Bank.
Sharia Compliance and Audit
Shari’a Compliance and Audit’s main function is to build up Shari’a compliance controls in all areas of the Bank. The Shari’a Compliance and Audit works independently and reports to the SSB. It provides Shari’a guidance and direction in day to day matters to the Bank’s management as per the resolutions of the SSB and escalates new issues to the SSB to seek their guidance and directives.
Sharia Compliance and Audit facilitates in ensuring compliance with Shari’a guidelines (as manifested by Fatawa issued by the SSB) and Islamic banking stipulations of the Central Bank of Oman on a day to day basis in all its business activities, operations and transactions. For this purposes it reviews all the contracts, agreements, policies, procedures, products, process flows, transactions, reports (profit distribution calculation) and etc. and raises issues to SSB for directives. To attain higher level of Sharia Compliance, it conducts Shari’a audit of all executed contracts on quarterly basis (as per audit plan and checklists approved by SSB) and produces Shari’a audit reports by examining the extent of compliance with Shari’a principles, Fatawa, guidelines and directives issued by the Bank’s SSB.
Head Sharia Compliance and Audit
Azhar Hamid is currently Head Sharia Compliance and Audit of Alhilal Islamic. He has experience of Sharia structuring and coordination spanning over seven years. His experience focuses on Sharia Audit and Compliance, product development (retail, corporate, wealth management and Sukuk products), documentation of Islamic banking and conducting training sessions on Islamic banking and finance.
Prior to current assignment Azhar has worked as Deputy Head of Sharia Department at Doha Islamic Bank, Manager Sharia Audit and Training at Dubai Islamic Bank and Lecturer Islamic Banking at International Islamic University Islamabad.
Azhar holds MSc. Economics and MPhil degree with specialization in Islamic Banking and Finance from International Islamic University Islamabad and did several courses on Sharia compliance and Audit such as AAOIFI’s CSAA training course, course on Sharia Auditing offered by Dar ul-Mashwara Qatar and etc.