Dubai-based Shariah consultancy Minhaj Sharia’h Financial Advisory and Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOFI) have launched a set of 11 new Shariah standards that will help regional and global Islamic financial institutions tackle contemporary issues of banking, finance and investment.
The new standards stipulate Shariah-compliant ways to sort out issues arising from uncertainty (gharar) in financial transactions and arbitration, endowment (waqf), labour leasing (ijarah), zokah, contingent obligation, credit facilities, online financial transactions, pledge (rahn), investment accounts and profit distribution, and Islamic reinsurance.
Harmonisation of Sharia’h standards brings advantage of uniform interpretation of Shariah laws for regional and global Islamic financial institutions.
Since the beginning of last year, 14 standards have been adopted and the total number of the existing AAOFI standards number over 84. Development of AAOFI’s standards was undertaken by its Shariah board and accounting and auditing standards board.
“The launch of the standards is a salient indication of the constant evolution of Islamic banking and finance with contemporary focus, particularly in the aftermath of the global financial crisis,” Dr Abdul Sattar Abu Ghuddah, Minhaj Chairman, said at the launch.
“The laws have brought in greater harmonization to the Shariah principles which will help further the growth of Islamic banking and finance,” he said.
AAOFI’s Assistant General Secretary Khairul Nizam said that the new standards will contribute to the growth and evolution of Islamic financial industry which now has Shariah-compliant assets estimated at $1.275 trillion. The industry is growing at an average annual rate of 15-20 per cent and the positive trend will continue despite economic fluctuations thanks to the in-built prudence in Shariah principles.