Shariah Supervisory Board

Shariah Supervisory Board (SSB) is one of the main components of an Islamic bank. Shariah boards have fiduciary responsibilities towards the institution’s stakeholders.

In theory, the role of SSB involves six areas:

  1. Provide fatwas that certify permissible financial products;

  2. Undertake Shariah audit to ensure products comply with guidelines;

  3. Calculate zakat payments;

  4. Dispose of non-Shariah compliant income or earnings;

  5. Provide advice to the bank on the distribution of income to shareholders or depositors/investment account holders.

  6. Provide guidance to the bank on its wider social role

However, in practice, the role of Shariah boards varies significantly from one country to another. Further, there are three types of Shariah boards:

  1. International Shariah Boards: For example, AAOIFI, Islamic Development Bank (IDB). The main role of AAOIFI’s Shariah board is to publish Shariah standards in order to harmonise the industry’s practices. The IDB Shariah boards acts in advisory capacity by providing Shariah opinions and working closely with other international agencies (such as: IFSB) in developing standards.

  2. National Shariah Boards: For example, Malaysia, Pakistan, Sudan, Indonesia. In this case, the national Shariah board has the overall authority on Shariah governance framework and policy.

  3. Institutional Shariah Boards: These are commonly referred to as Shariah Supervisory Boards (SSBs) and work on an institutional level.

Challenges Facing Shariah Supervisory Board

SSBs include some of the most prominent and respected scholars. Many of these scholars are highly regarded with their opinions having the potential to move markets. Nonetheless, concerns have been raised, that since Shariah scholars are generally employed directly by the financial institutions, their independence can be compromised, since bank managers use their influence to gain more acceptable opinions. This has been commonly referred to as “Fatwa shopping” or “Shariah advisory à la carte”.

Moreover, a decentralised approach to Shariah governance has led to further fragmentation in the industry, increasing transaction costs and overall efficiency of Islamic banks, compared to conventional banks. This has led to calls for a nationalised approach to Shariah governance. (One of the main arguments in favour of the Shariah board for each individual institution is that it encourages product development and innovation in the fast-growing industry).

Exhibit 1: Shariah Governance Framework (Key markets)

CountryCentralized SSB or High Shariah
Authority or Fatwa Board
Islamic Rating Agency 

Source: World Bank

Exhibit 2: Shariah Corporate Governance Institutions by Country

CountrySeparate Islamic 
Banking & Takaful

Centralized SSB or 
High Shariah

Islamic Rating 
Separate Islamic Capital Market Department 
BahrainYes, Islamic Financial Institutions Supervision Directorate No, but the International Islamic Financial Market is to promote the harmonization and convergence of Shariah interpretations in developing Islamic banking products and practices which are universally acceptable No, but International 
Islamic Rating Agency operates in Bahrain
IndonesiaYes, the Directorate of 
Shariah Banking 
Yes, the National Shariah Board is authorized to issue fatwas concerning products, services and operations of BIFS. It also recommends Shariah advisors to BIFS No 
KuwaitNoThe Fatwa Board in the Ministry of Awqaf and Islamic Affairs is the final authority on Shariah disputes. Its advice is binding when it arbitrates on disputes between members of the same SSBNoNo
MalaysiaYes, Regulation Department –Islamic Banking and TakafulYes. The Shariah Council advises central bank on Shariah matters and is the ultimate arbiter in Shariah interpretation disputes. The directives issued by BNM in consultation with the Shariah Council have binding authority over Banks with Islamic windows.Yes, Malaysian Rating Corporation - Islamic Capital Market DepartmentYes, Malaysian SEC- Islamic Capital Market Department. The SEC also has its own Shariah Advisory Board
SudanN/A, the whole financial regulatory system is Islamic Yes, the Shariah High Supervisory Board is responsible for fatwas, contract specimen, arbitrage, consultations relating to Islamic legal aspects, training, research, lectures, and seminarsNoN/A, the whole financial regulatory system is Islamic
PakistanYes, Islamic Banking DepartmentYes, the Shariah Board of the State Bank is to advise the central banks on matters of Shariah. It also produces specimen of permissible Islamic Financial contract to ensure compliance with minimum Shariah standardsNoNo, but several departments share Islamic finance portfolio
UAENoYes, the Higher Shariah Authority, attached to the Ministry of Justice and Islamic Affairs, is the final arbiter on Shariah matters. It is also responsible of Shariah supervisionNoNo

Source: Official country websites and central bank Annual Reports; World Bank

Exhibit 2: Shariah Supervisory Boards for the Biggest Islamic Banks

Bank NameScholar NameBoard Position
Dubai Islamic Bank (DIB)Dr. Hussein Hamed Hassan  Chairman
 Dr. Mohammed Abdul Hakeem Zoeir Member
 Dr.Muhammad Qaseem Member
 Dr.Mohammed Abdulrahim Sultan Al Olama  Member
 Dr.Yusef Abdullah AlShubaily Member
Al Rajhi BankSheikh Abdullah Bin Mohammed bin KhonainChairman
 Dr. Yousuf Bin Mohammed Al GhafeesVice-chairman
 Sheikh Abdullah Bin Nasser Al SalmiMember
 Dr. Abdulaziz Bin Hameen AL HameenMember
 Dr. Saleh Bin Abdullah Al LohaidanMember & Secretary
Kuwait Finance House (KFH)Dr. Sayyed Mohammad Al-Sayyid Abdul Razzaq Al-Tabtaba’e Chairman
 Dr. Khaled Al-OtaibiMember
 Dr. Anwar AbdulsalamMember
 Dr. Isam Al-GhareebMember
 Dr. Mubarak Al-HarbiMember
Abu Dhabi Islamic Bank (ADIB)Sheikh Muhammad Taqi Al UthmaniChairman
 Dr. Abdul Sattar Abu GhuddaVice Chairman
 Dr. Jasem Ali Al ShamsiMember
 Sheikh Nizam Muhammad YaqoubiMember
 Dr. Mohamed Ali ElGariMember
Qatar Islamic Bank (QIB)Sheikh Walid Bin HadiChairman
 Prof. Abdul Sattar Abou GhoddaMember
 Dr. Mohamad AhmaineAdmin. Member

Source: 2015. For latest information on Shariah Scholars, please see:

Further Reading on Shariah Supervisory Boards

  1. Shari'ah Governance in Islamic Banks (Edinburgh Guides to Islamic Finance) Hardcover – 27 Jul 2012

  2. Corporate Governance and Shariah Compliance in Institutions Offering Islamic Financial Services:

  3. Shariah Governance:

  4. Shariah Scholars in the GCC - A Network Analytic Perspective:
Copy URL