THEORETICAL ASPECTS IN THE FORMATION OF
PEDAGOGICAL SCIENCES
International scientific-online conference
59
THE ROLE OF SHARIA BOARDS IN APPROVING AND MONITORING
ISLAMIC BANKING SERVICES: A LEGAL ANALYSIS
Sobitkhonov Jokhongir Zunnurkhon ugli
Independent Researcher at Tashkent State University of Law,
Lecturer at the Department of Business Law
e-mail: sobitxonovjahongir@gmail.com
https://doi.org/10.5281/zenodo.15727469
Abstract
This paper presents a detailed legal and comparative analysis of
the functions, challenges, and regulatory models of Sharia boards in Islamic
banking services. Drawing on global best practices, authoritative legal sources,
and scholarly opinions from respected Sunni jurists, this study highlights the
pivotal role of Sharia governance in ensuring the ethical and legal compliance of
Islamic financial institutions (IFIs). It also evaluates the prospects of
implementing Sharia boards in Uzbekistan, given the regional and international
experience, and offers recommendations for a sustainable legal framework.
Keywords:
Sharia boards, Islamic banking, Sharia governance, AAOIFI,
IFSB, Islamic finance, legal analysis, fatwa, comparative law.
1. Introduction
Islamic banking, guided by the principles of Sharia, has
emerged as a critical alternative to conventional financial systems, especially in
Muslim-majority regions. Unlike conventional banks, Islamic banks must comply
with jurisprudential principles rooted in the Qur’an and Sunnah. This
necessitates the establishment of Sharia supervisory boards (SSBs) to oversee
compliance. The increasing complexity of Islamic finance products has further
amplified the role of SSBs in maintaining the ethical backbone of the industry
[1].
2. Methodology
This study follows the IMRaD structure and utilizes a
qualitative, doctrinal approach. Data was collected from primary sources such as
legal texts, AAOIFI and IFSB standards, and state-issued regulations, alongside
secondary sources like peer-reviewed articles and books from scholars
including Shaykh Wahbah al-Zuhayli, Shaykh Ali Qaradaghi, Mufti Muhammad
Taqi Usmani, and others. Comparative case studies from countries like Malaysia,
UAE, Pakistan, UK, and Central Asia enrich the analysis.
3. Results
3.1. The Legal and Jurisprudential Basis for Sharia Boards
Sharia
boards derive their legitimacy from the need for Sharia compliance. AAOIFI’s
GSIFI 1 and IFSB guidelines underscore the need for structured governance and
independent scholarly oversight. Shaykh Wahbah al-Zuhayli emphasized in his
writings that financial transactions require clear, qualified oversight due to the
THEORETICAL ASPECTS IN THE FORMATION OF
PEDAGOGICAL SCIENCES
International scientific-online conference
60
sensitive nature of halal and haram in finance [2]. Qaradaghi also maintains that
the legitimacy of Islamic banks hinges on the credibility of their Sharia boards
[3].
3.2.
Functional Responsibilities of Sharia Boards Ex-ante Approval
:
Each new product or contract is reviewed and approved by the SSB.
Ongoing Monitoring
: Internal and external Sharia audits are conducted
regularly.
Fatwa Development
: Legal opinions guide policy and operational
practices.
Dispute Resolution
: Boards often mediate or issue rulings in compliance
issues.
3.3.
Comparative International Practice
Malaysia
: Dual-layer governance includes a central Sharia Advisory Council
and institutional SSBs. Legally binding fatwas reduce fragmentation.
United Kingdom
: The Financial Conduct Authority (FCA) allows
decentralized Sharia compliance but requires transparency and disclosure.
Scholars like Nizam Yakubi have contributed significantly to refining this model
[4].
Pakistan
: A centralized Sharia board under the State Bank ensures uniform
fatwa issuance and enforces compliance through Sharia audits [5].
Turkey and Indonesia
: Government-backed Islamic banks and legal
recognition of Sharia boards have facilitated broader acceptance.
GCC (e.g., UAE, Oman)
: SSBs are integrated within central banks; dual
governance ensures market flexibility while maintaining credibility.
Central Asia
: Kazakhstan and Kyrgyzstan have adopted AAOIFI standards.
Tajikistan has begun legislative reforms, but expert shortages persist [6].
3.4. Challenges in Sharia Board Governance
Fragmented Fatwa Authority
: Diverse interpretations create legal
uncertainty.
Scholar Shortages
: There is a global deficit of scholars trained in both
Sharia and modern finance.
Conflict of Interest
: Scholars sometimes serve multiple banks, raising
independence issues.
Legal Ambiguity
: Many jurisdictions lack codified legal recognition of SSB
authority.
4. Discussion
THEORETICAL ASPECTS IN THE FORMATION OF
PEDAGOGICAL SCIENCES
International scientific-online conference
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4.1 Opinions from Prominent Scholars
Mufti Muhammad Taqi Usmani
asserts that without proper Sharia governance, Islamic banks risk becoming
“Islamic in name only.” Shaykh Ali Qaradaghi argues for centralized Sharia
boards to avoid inconsistency. Shaykh Wahbah al-Zuhayli supported codified
legal frameworks for Islamic financial operations to maintain public trust [7][8].
Dr. Abdus Sattar Abu Ghuddah emphasized the importance of Sharia audits and
independent reviews to maintain integrity.
4.2 Uzbekistan’s Context and Legal Potential
Uzbekistan's legal system
currently lacks explicit provisions for Sharia-compliant banking. However, the
2020 Presidential Decree on financial inclusion encourages alternative financial
mechanisms. With growing interest from international investors and domestic
demand, the legal establishment of SSBs is increasingly relevant. According to
Islommoliyasi.uz, regulatory readiness and scholarly capacity building are
central to successful implementation [9].
4.3. Integration Benefits and Legal Conditions
Social Cohesion
: Providing Sharia-compliant options improves trust in
banking.
Investment Attraction
: Sukuk and other Islamic instruments can attract
Gulf capital.
Legal Steps
:
Amend Banking Law to include SSBs.
Define SSB authority and accountability.
Mandate compliance with AAOIFI governance standards.
Partner with international training bodies (e.g., ISRA, INCEIF).
4.4 Solutions to Identified Challenges
Challenge
Recommendation
Fatwa
inconsistency
Establish centralized national Sharia board
Scholar shortage
Introduce finance-Sharia dual curriculum at universities
Legal gaps
Draft special Islamic Banking Law based on AAOIFI
standards
Conflict of interest Impose term limits and independence rules for scholars
5. Conclusion
Sharia boards are foundational to the ethical and legal
architecture of Islamic banking. Their roles in product approval, monitoring, and
THEORETICAL ASPECTS IN THE FORMATION OF
PEDAGOGICAL SCIENCES
International scientific-online conference
62
jurisprudential guidance ensure the sector’s integrity. Comparative models
highlight the importance of centralized governance, legal clarity, and trained
experts. Uzbekistan stands at a promising juncture—if legal reforms and
educational efforts align, the country can integrate Islamic banking effectively
and responsibly.
References:
1.
IFSB (2020). Guiding Principles of Sharia Governance Systems. Kuala
Lumpur: Islamic Financial Services Board.
2.
Zuhayli, W. (2007). Financial Transactions in Islamic Jurisprudence.
Damascus: Dar al-Fikr.
3.
Qaradaghi, A.M. (2020). Shariah Parameters of Islamic Banking. Doha.
4.
Yakubi, N.M.S. (2021). Principles of Islamic Economics. Jeddah.
5.
Usmani, M.T. (2002). An Introduction to Islamic Finance. Karachi: Idaratul
Ma’arif.
6.
Islamic Development Bank (2022). Islamic Finance in Central Asia:
Opportunities and Challenges. Jeddah.
7.
Abu Ghuddah, A.S. (2019). Contemporary Issues in Islamic Finance.
Amman.
8.
Islommoliyasi.uz (2024). O‘zbekistonda islom moliyasi rivoji: muammolar
va istiqbollar. Retrieved from: https://islommoliyasi.uz
9.
AAOIFI (2017). Governance Standard for Islamic Financial Institutions No.
1. Bahrain: AAOIFI.
10.
IFSB (2021). Sharia Governance Frameworks: A Global Overview. Kuala
Lumpur.
11.
Ali, S.S. (2011). Shariah Governance in Islamic Banks. Islamic
Development Bank - IRTI Working Paper Series.
