MANAMA: The time has come for the Islamic finance industry globally to formally adopt uniform Shari’a standards, according to H.E. Rasheed M. Al-Maraj, Governor, Central Bank of Bahrain (CBB).
HE was addressing the AAOIFI-World Bank conference which has become an annual event applauded to see the increasing support for Islamic finance by global institutions such as the World Bank.
“Since these standards are the backbone of the Islamic finance industry it is important to achieve consensus on what is acceptable and what is not acceptable from Shari’a perspective. Today, AAOIFI Shari’a standards are already the default benchmark for the industry, even for those markets which have not adopted these standards formally. And there is good reason why AAOIFI Shari’a standards have this stature worldwide. AAOIFI’s Shari’a board has representation from all major schools of thought. It carries some of the most respectable names in Shari’a scholarship. Over the last 25 years it has produced dozens of standards which follow a certain rigor and a well-defined deliberation process.
“There is no other global platform which comes even close to where AAOIFI Shari’a standards are today. The next logical step is for each jurisdiction to formally adopt these standards in order to foster more clarity, convergence and consistency. Bahrain was among the first countries to recognize the benefit of adopting AAOIFI Shari’a standards, and made it mandatory for Islamic financial institutions in the country.
“The second point I want to highlight is about accounting standards. AAOIFI accounting standards were created because of the realisation that conventional accounting standards do not fully reflect the unique aspects of Islamic contracts and transactions. While this remains true, we have to take into account the paradigm shifting developments taking place in international accounting standards, especially after the global financial crisis. AAOIF, therefore has to enhance its efforts for the development of new Islamic accounting standards and upgrade of existing ones. I am glad to note that the AAOIFI leadership has already set out for itself an ambitious program in this regard.
“I would like to appreciate the recent new developmental initiatives announced by AAOIFI yesterday and today. In particular, I would like to appreciate the role played by the Waqf Fund, an endowment created by the CBB and the Islamic banking industry in Bahrain for development initiatives in Islamic finance research, training and education. The Waqf Fund has generously sponsored the further development of AAOIFI’s Certified Islamic Public Accountant (CIPA) qualification, which aims for global recognition.”