Islamic scholars propose new sharia board model

(Reuters) – A group of Islamic scholars is proposing a fresh solution to charges that banks’ sharia boards are open to conflicts of interest: create partnerships between the boards and Muslim depositors, to insulate the boards from pressure exerted by bank managements.

Sharia boards, composed of experts in Islamic financial law, supervise Islamic banks’ activities and products to make sure they conform to religious principles, such as bans on interest and pure monetary speculation.

Traditionally, banks appoint prestigious scholars to their sharia boards and pay them handsome fees and retainers. This has left the system vulnerable to charges of conflict of interest: the scholars are being paid by the institutions which they are supposed to be supervising impartially.

A group of scholars in South Africa, led by Durban-based Ebrahim Desai, a senior figure in the city’s Muslim community, proposes that Muslim depositors in each bank fund a sharia compliance body that would be created separately from the bank.

Read more :

http://in.reuters.com/article/2012/09/13/islamic-finance-scholars-idINL6E8JU8VU20120913

source : Reuters