Shari’ah law governs all economic and social activities and undertakings of Muslims and is derived from the “Qur’an and Sunnah which are the sayings practices of Prophet Mohammed”. According to Shari’ah law, the Islamic Financial system aims to enhance the economy of the country through purchasing and selling of physical assets (investment activities) which is considered one of the main principles of Shari’ah law.
FAB Internal Shari’ah Supervision Committee (“ISSC”) is the Bank’s main Shari’ah governance body comprising of four prominent Shariah Scholars, according to Shari’ah governance new Regulations, FAB is considering to appoint a fifth member. The ISSC operates in accordance with the requirements of the CBUAE and exercises their supervisory authority in accordance with the Islamic Jurisprudence (Fiqh al Muamalat) to ensure that all Islamic banking operations and activities are conducted in line with appropriate Shari’ah standards. The Bank’s Islamic Banking operation regularly seeks the guidance of the ISSC on matters relating to Shari’ah. The Bank offers its Islamic Banking products and services across all business segments through a window setup under the name FAB Islamic. In addition, the Bank has its UAE full-fledged Shari’ah-compliant subsidiaries First Abu Dhabi Islamic Finance Pvt.JSC as well as Islamic Banking operations in international locations including KSA, APAC and Europe.
The Bank’s Shari’ah Governance Framework (“SGF”) was revised and updated during the course of 2016 and these operate in full compliance with the best practice guidelines issued by the UBF. The SGF contains the key governing principles pertaining to the Islamic Banking window operations such as appointment of the Shari’ah Board, the responsibilities of the Head of Islamic Banking, the roles of the Internal Shari’ah Unit and relevant covenants towards regulatory adherence and the collective accountability of various stakeholders within the SGF.
The Corporate Governance Team is working with the Islamic Banking Team and stakeholders across the Group to ensure that the requirements of the new Banking Law, the CBUAE CG Regulations and Standards and the new Shari’ah regulations are fully adhered to and reflected in the Bank’s Shari’ah Governance Framework (SGF). The SGF includes provisions relating to the independence of the audit function within the Group Islamic banking business (e.g. a functional reporting line to the Head of Shari’ah and a dotted reporting line to the (ISSC). It also includes provisions regarding the tenure of the ISSC members, which will be on a three year basis, appointments taking place at the FAB Group General Assembly in 2020. Further information on Islamic banking governance is included in the SGF.