Sharia Compliant in Private Zakat Institutions of Riau

Primary Reference

This study aims to understand the role of Sharia Supervisors in the private Zakat Institution (LAZ) as well as other aspects of sharia compliance, such as Zakat fatwa on the perspective of Zakat officers. According to Decree of the Minister of Religion Number 333 / 2015 that LAZ as register must have a sharia supervisor. Sharia compliance of an institution could rely on the role of the sharia supervisory board (SSB). Some literature discussing this topic is still dominated study on Islamic financial institutions (IFIs), especially in Islamic Banks. Therefore this article will contribute to the body of knowledge, especially in the zakat literature. Data were gathered from five presiding officers of private zakat institutions in one province in Indonesia which consists of three presiding officers from provincial LAZ representative and two presiding officers from LAZ district. The study found that Sharia compliance in LAZ had many weaknesses such as lack of sharia control by sharia supervisors, a member of the sharia supervisory board who does not follow the latest issues about Zakat or the absence of competency requirements to be a sharia supervisor at LAZ and also did not make Zakat fatwa issued by MUI as the primary reference by zakat officer. This information will be useful for stakeholders, including supervisory authorities and regulators.

Drivers of Ar-Rahnu (pawn) acceptance: Malaysian evidence

Journal of Islamic Marketing ◽

10.1108/jima-08-2019-0161 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Hassanudin Mohd Thas Thaker ◽

Ahmad Khaliq ◽

Mohamed Asmy Bin Mohd Thas Thaker ◽

Anwar Bin Allah Pitchay ◽

K. Chandra Sakaran

Keyword(s):

Financial Institutions ◽

Perceived Risk ◽

Credit Card ◽

Social Factor ◽

Partial Least Square ◽

The Body ◽

Least Square ◽

Islamic Banks ◽

Content Type ◽

Purpose The purpose of this paper is to examine the factor persuading the acceptance of Islamic pawn broking (Ar-Rahnu) among Islamic bank customers. Design/methodology/approach The authors collected the data using a self-administered questionnaire design and analysed using SPSS Statistics and smart partial least square. The study is restricted to only respondents who are based in the area of Klang Valley (Selangor and Kuala Lumpur), as these two areas have a larger number of Islamic banks and a decent number of Islamic banks’ clients. A total of 381 respondents’ responses are used for this study, and the constructs involved for analysis purpose are affect, social factor, facilitating conditions, perceived financial benefits and perceived risk constructs. Findings The finding suggests a significant positive association for social factor and perceived risk, while negative association learnt for affect on acceptance of Ar-Rahnu financing. On the same note, the facilitating condition and perceived financial benefit are found insignificantly related. Practical implications The findings generated from this study are expected to enrich the literature on the body of knowledge, as it has served to broaden the understanding of the Ar-Rahnu acceptance level in Malaysia. As mentioned, there is limited literature available using this type of financing. Existing studies focus too much on conventional financing products such as personal financing, credit card, short-term loan and many others. Less attention is given to Ar-Rahnu financing. Thus, this study expected to add value to the literature available in the context of Islamic pawn broking business. Moreover, the findings of this study will be very helpful for the Islamic financial institutions to find the best way to retain Ar-Rahnu clients and encourage more client to choose Ar-Rahnu as a mode of financing. Originality/value This study owns greater potential to assist Islamic financial institutions to discover the best techniques to retain and encourage the grander number of clients for Ar-Rahnu as a mode of financing.

Contribution of Sharia Supervisory Board (SB) and Sharia Compliance Levels to Performance Indonesian Sharia Banking

Jurnal Manajemen ◽

10.32832/jm-uika.v11i1.3039 ◽

2020 ◽

Vol 11 (1) ◽

pp. 114

Author(s):

Prilla Kurnia Ningsih

Keyword(s):

Financial Institutions ◽

Supervisory Board ◽

Islamic Banks ◽

Efficiency Ratio ◽

Labour Costs ◽

Absolute Requirement ◽

Effectiveness And Efficiency ◽

Branch Office ◽

Productive Assets

Sharia compliance is an absolute requirement that must be fulfilled by financial institutions that conduct business activities based on sharia principles as a manifestation of the characteristics of Islamic financial institutions. Supervisory Board (SB) contribution oversees and is responsible for ensuring all products and procedures of Islamic banks are by sharia principles. This study aims to measure the ratio of participation, effectiveness and efficiency of the sharia supervisory board to Islamic banking in Indonesia. This study used the AHP method with three indicators; the rate of contributions measured through sharia branch office in public Islamic bank and sharia business unit, to the effectiveness ratio measured by the total productive assets variable in public Islamic and sharia businesses unit, while the efficiency ratio is measured by aggregate variables of operating expenses and labour costs for Islamic public bank and sharia businesses unit. Based on this research, here are some critical result such as the ratio of the overall contribution is useful. The effectiveness ratio shows that the Supervisory Board (SB) is ineffective or not valuable for lending activities in Islamic banks based on Islamic public bank branch offices and sharia businesses unit. And the results for efficiency ratios indicate that overall Supervisory Board (SB) is less efficient for Islamic banks when issuing operational costs on Supervisory Board (SB) contributions.

Musharakah Mutanaqisah home financing: issues in practice

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-08-2015-0036 ◽

2018 ◽

Vol 9 (1) ◽

pp. 91-103 ◽

Cited By ~ 7

Author(s):

Alam Asadov ◽

Zulkarnain Bin Muhamad Sori ◽

Shamsher Mohamad Ramadilli ◽

Zaheer Anwer ◽

Shinaj Valangattil Shamsudheen

Keyword(s):

Financial Institutions ◽

Current Mode ◽

Fair Value ◽

The Body ◽

Islamic Finance ◽

Islamic Banks ◽

Periodic Review ◽

Content Type ◽

Finance Industry ◽

Purpose This paper aims to examine the practical issues in the Musharakah Mutanaqisah (MM) financing and subsequently, recommends possible solutions to mitigate these issues and improve the current practice. Design/methodology/approach This paper analyses the theory and current practices of MM offered by Islamic banks. Findings It is suggested that Islamic financial institutions consider revaluation of property’s value to its fair value, especially during termination of MM contract and annual or agreed periodic review of the market value of the assets to determine the “rental” payments by the customer. It is also recommended that Islamic financial institutions should share all associated costs in performing the contract. Research limitations/implications Research findings reported in this paper contribute to the body of knowledge on MM in general and to the Islamic finance practices in Malaysia and abroad. Indeed, the Malaysia Central Bank (i.e. Bank Negara Malaysia) should form a special committee to look into the issues highlighted in this paper and recommend strict guidelines for Islamic financial institutions to improve their practices. Practical implications Islamic banks should extend the use of MM contract in automobile and trade financing where rent or profit could be easily identified and value of the asset is more certain. The regulators and Islamic financial standard setting authorities need to oversee the Shari’ah board decisions on MM contracts and keep the gates in the interest of ensuring a more viable and authentic Islamic finance industry. Originality/value This paper briefly views the current mode of MM contracts, specifically for home financing, and highlights the incompliance to Shari’ah requirements in exercising these contracts in practice.

The independence of the Shari’a supervisory board in the Islamic financial institutions of the GCC countries

Corporate Board role duties and composition ◽

10.22495/cbv6i2art2 ◽

2010 ◽

Vol 6 (2) ◽

pp. 20-34

Author(s):

Samy Nathan Garas ◽

Chris Pierce

Keyword(s):

Financial Institutions ◽

Boards Of Directors ◽

Code Of Conduct ◽

Supervisory Board ◽

Executive Management ◽

Gcc Countries ◽

The Board Of Directors ◽

Supervisory Boards

Islamic Financial Institutions (IFIs) are governed by two boards: the Board of Directors (BoD) and the Shari’a Supervisory Board (SSB). The SSB is a panel of Shari’a scholars who act independently from other governance organs. This paper discriminates between dependent SSBs and independent SSBs by using twenty one variables, which are classified into three groups: the implementation of governance best practices, the recruitment of SSB members, and the relationship between the SSB members and other governance organs. This study is one of the first studies that provide empirical results about the SSB independence. Nevertheless, the research focuses exclusively on the Gulf Cooperation Council (GCC) countries and excludes the other countries where Shari’a supervision might have different forms. The study has developed a hypothesis, which was tested by a questionnaire. Data was collected from 76 Shari’a Supervisory Boards, 73 Boards of Directors, and 59 shareholders of IFIs in the GCC countries (Bahrain, Kuwait, Qatar, Saudi Arabia, and UAE) during 2009. The discriminant analysis has been used in identifying both dependent and independent SSBs. The paper finds five variables relevant in discriminating the two groups. These variables are the incentives provided to the SSB; the average remuneration to the SSB members; the existence of the policy of penalties for violating the code of conduct; the relation between the SSB members and the BoD; and the role of executive management in recruiting SSB members.

Shar¯ı‘ah Resolution and Islamic Finance: A Review

Journal of Islamic Business and Management (JIBM) ◽

10.26501/jibm/2021.1101-003 ◽

2021 ◽

Vol 11 (01) ◽

pp. 29-39

Author(s):

Zakir Hossen Shaikh ◽

◽

Adel M Sarea ◽

Abdelrahman Al-Saadi ◽

Iqbal Thonse Hawaldar ◽

...

Keyword(s):

Financial Institutions ◽

Qualitative Method ◽

New Products ◽

Detailed Examination ◽

Central Banks ◽

Islamic Finance ◽

Islamic Banks ◽

Legal Response ◽

Purpose: The purpose of this study is to look into the Shar¯ı‘ah resolution framework in Islamic finance and see how it may be improved. This paper is based on a detailed examination of previous research into the need for a worldwide Shar¯ı‘ah Resolution mechanism to be applied across all IFIs. Methodology: A detailed analysis of past studies on the necessity of a Shar¯ı‘ah Resolution framework to be implemented globally by all IFIs was used to develop the qualitative method. Findings: Measuring the level of fatwá disclosure by specific Islamic banks through central banks Shar¯ı‘ah judgements will add to the existing literature while also filling a gap. Significance: This study is noteworthy because it lays the framework for future researchers on the topic. Using a central bank to assess the extent to which certain Islamic banks have disclosed fatwá. Limitations: These articles’ implications may aid in the explanation of Shar¯ı‘ah-related concerns in Islamic finance. Shar¯ı‘ah resolution in Islamic finance will be a significant Shar¯ı‘ah resource for new products supplied by Islamic financial institutions, as well as any existing goods given to new clients and industry practitioners. Implications: The fatwá is the legal response to the present difficulties that have arisen in the community. fatwá are used to disseminate knowledge to Muslims in order to alleviate their difficulties and misconceptions. Any fatwá-related knowledge will have an impact on individuals, societies, and organizations . As a result, this paper examined the role of fatwás in sharing information and determining how far fatwás can educate society in resolving problems.

FEASIBILITY OF BAY SALAM FINANCE: A SURVEY OF THE OPINIONS OF STAKEHOLDERS

Global Review of Islamic Economics and Business ◽

10.14421/grieb.2018.061-01 ◽

2018 ◽

Vol 6 (1) ◽

pp. 001

Author(s):

Muhammad Tahir Manoori ◽

Atiq-ur-Rehman Atiq-ur-Rehman ◽

Muhammad Jamil ◽

Muhammad Ishfaq

Keyword(s):

Financial Institutions ◽

Urban Areas ◽

Formal System ◽

Survey Questionnaire ◽

Islamic Banks ◽

Livestock Farming ◽

Agriculture Sector ◽

Spss Software

The present study aims to explore the potential application of Bai Salam (forward sale agreement) as substitute financial instrument in the agriculture sector of Pakistan. The conclusion is drawn through a survey questionnaire from 300 farmers and bankers in a district of Punjab. For analysis, we use SPSS software and presented the results by using descriptive methods. This study overall concludes the banker’s and farmer’s awareness, willingness, risks, hurdles and the role of institutions in the Salam promotion. The majority of the farmers are not aware of the Salam contract because the Islamic bank’s branch network is limited to urban areas and there is no proper promotion campaign launched by the Islamic banks for awareness about Salaam among the farmers. Bankers are reluctant to finance the tenants, orchards due to more operational risk for the bank. Bankers opinion that small farmers do not have personal securities which is not a solid reason because half of the sampled farmers take a loan from the formal system if they can provide securities to conventional interest-based institution why they can’t provide securities to Islamic financial institutions? There is a vast market for the Islamic Banks if they sincerely pay their attention towards forward sale contracts. The concept applies to all areas of agriculture and livestock farming to overcome financing problems and boost production.

Examining the legitimacy of Sukuk structure via Shariah pronouncements

Journal of Islamic Marketing ◽

10.1108/jima-03-2018-0050 ◽

2019 ◽

Vol 10 (4) ◽

pp. 1151-1166 ◽

Cited By ~ 1

Author(s):

Essia Ries Ahmed ◽

Aminul Islam ◽

Azlan Bin Amran

Keyword(s):

Financial Institutions ◽

Significant Contribution ◽

Public Awareness ◽

Supervisory Board ◽

Secondary Data ◽

Descriptive Statistics ◽

Content Type ◽

Regulatory Frameworks ◽

Purpose The purpose of this paper is to investigate and detect disclosure on the legitimacy identity of Sukuk structure in Shariah pronouncements. The study also examines the role of Shariah supervisory board on disclosure of legitimacy in Shariah pronouncements. Design/methodology/approach A total of 54 Islamic Sukuk in Malaysia representing the whole population were selected. Secondary data were used and sourced from Shariah pronouncements on Sukuk. Using descriptive statistics, the existence and the extent of existence of legitimacy disclosure on Sukuk in Islamic financial institutions in Malaysia were ascertained. Findings Using descriptive statistics, the existence and the extent of existence of legitimacy disclosure on Sukuk in Islamic financial institutions in Malaysia was ascertained. The research found that there is empirical evidence showing the effect of Shariah supervisory board on disclosure of legitimacy identity in Shariah pronouncements. Originality/value This study offers significant contribution to existing legitimacy of Sukuk structure literature. The study added a new discussion, i.e. legitimacy disclosure on the Sukuk. The study is intended to increase public awareness for legitimacy identity of Sukuk in the importance of Shariah compliancy not only in the form but also in substance. In addition, this study will give more benefits for Islamic financial institutions in the sense that they should amend some of their regulatory frameworks to push the Sukuk market investors to move toward asset-backed structure.

A qualitative analysis on the determinants of legitimacy of sukuk

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-01-2016-0005 ◽

2019 ◽

Vol 10 (3) ◽

pp. 342-368 ◽

Cited By ~ 3

Author(s):

Essia Ries Ahmed ◽

Md Aminul Islam ◽

Tariq Tawfeeq Yousif Alabdullah ◽

Azlan Bin Amran

Keyword(s):

Financial Institutions ◽

Supervisory Board ◽

Sampling Technique ◽

Structured Interview ◽

Moderating Effect ◽

The Body ◽

Basic Knowledge ◽

Content Type ◽

The Relationship

Purpose This paper aims to investigate the influence of the determinants (pricing, type of structure, Shariah auditing, Shariah risk and Shariah documentation) and the sukuk legitimacy among Islamic financial institutions using a qualitative approach. The paper further explained the significance of the determinants on legitimacy, evaluated the relationship between sukuk characteristics and sukuk legitimacy and examined the moderating effect of Shariah Supervisory Board (SSB) on the relationship. Design/methodology/approach The study used a purposive sampling technique to select the target respondents required for the survey (semi-structured interview). This technique is applied by selecting members of SSBs among Islamic financial institutions. A total number of ten members are selected as the sample size for the study based on their experience and basic knowledge of Fiqh Al-Mua’malat and its application in Islamic financial institutions. Findings The findings revealed that the determinants have a significant impact on the sukuk legitimacy, meaning that there is a positive and significant relationship between the determinants and the sukuk legitimacy. In addition, this study indicates the empirical evidence of the moderating effect of SSB on the relationship between the determinants and the sukuk legitimacy. Practical implications This study has added to the literature by examining the determinants of sukuk legitimacy while evaluating the moderating effect of SSB on the relationship. Besides, this might add benefits to the numerous Islamic financial institutions relating to the amendment of its regulatory frameworks with the view to pushing the sukuk market investors to move toward asset-backed structure. In addition, the SSB in central banks must also focus its attention regarding the sukuk legitimacy and its application among the various Islamic financial institutions. Originality/value This study has added a new discussion to the body of knowledge, i.e. examining the sukuk legitimacy and its relationship with sukuk determinants; hence, an approach that is not widely discussed in the previous studies. Furthermore, conducting such research in the field of Islamic finance provides novelty in the literature among both emerging and developed economies including Malaysia. This is because to the best knowledge of the researchers, there was no empirical study (within the literature) that combined these variables and evaluated their empirical significance. Accordingly, this would enlighten the Islamic Ummah and propel the society’s intensity toward contributing to knowledge and might further provide clarification on the determinants and the sukuk legitimacy to prospective scholars, precisely on the moderating effect of SSB on the relationship between determinants and legitimacy of sukuk.

NON-SHARIAH COMPLIANCE OF ISLAMIC BANKS AND CUSTOMERS COMMITMENT: TRUST AS MEDIATOR

Advanced International Journal of Banking, Accounting and Finance ◽

10.35631/aijbaf.38003 ◽

2021 ◽

Vol 3 (8) ◽

pp. 28-36

Author(s):

Muhammad Usman ◽

Anwar Allah Pitchay ◽

Munazza Zahra

Keyword(s):

Financial Institutions ◽

Quantitative Approach ◽

Islamic Banks ◽

The Impact ◽

The Relationship

The purpose of this paper is to find out the impact of non-shariah compliance (NSC) of Islamic banks on the commitment of the customers and the role of trust as a mediator. The paper uses a quantitative approach by using surveys to collect data from 276 respondents. Smart PLS was used to run the analysis. Non-compliance of Islamic financial institutions with shari’ah principles significantly affects the commitment of the customers. Results of this showed that trust significantly impacts the commitment of the customers, study also indicated that trust mediates the relationship between the commitment and no-shari’ah compliance.

Lembaga Pengawas Syariah Dalam Sorotan

Tafáqquh: Jurnal Penelitian Dan Kajian Keislaman ◽

10.52431/tafaqquh.v7i1.184 ◽

2019 ◽

Vol 7 (1) ◽

pp. 31-51

Author(s):

Yovenska L.Man

Keyword(s):

Corporate Governance ◽

Financial Institutions ◽

Supervisory Board ◽

The Other ◽

Good Corporate Governance ◽

Other Hand ◽

Implementing Strategies ◽

The Ideal

Abstract: Islamic financial institutions are currently considered quite significant. However, on the other hand, of course, everything is not free from some shortcomings that should be a concern. Among those questioned, among others, is the role of the Sharia Supervisory Board in terms of implementing Good Corporate Governance (GCG). This paper will focus on discussions regarding planning and implementing strategies towards the Ideal Sharia Supervisory Board