The Bank shall always conduct its business in accordance with the Islamic Sharia rules.
In compliance with licensing requirements of the Central Bank of Bahrain (CBB), the Bank’s Articles and Memorandum of Association and the general practice of Islamic Banking, the Bank, at all times, has a Sharia Supervisory Board (SSB) elected by the shareholders at General Meetings based on recommendations of the Board of Directors (through the Remuneration & Nomination Committee).
The SSB actively participates in developing and overseeing the Bank’s products and business activities. It is responsible for certifying every product to ensure strict adherence to the principles of Sharia.
The SSB has full access to the Board, management personnel of the Bank including access to the Bank’s Sharia Compliance Officer who is proactively involved in: (a) reviewing and advising on the Sharia compliance of all products and investment projects, (b) auditing the operations of the Bank from Sharia point of view, and (c) producing reports to the SSB in order to ensure that the Bank’s activities are under a strict and direct oversight of Sharia guidelines. Furthermore, the Sharia Compliance Officer monitors on a day to day basis in ensuring that all areas of the Bank adhere to SSB’s recommendations, advices and opinions.
The current Sharia Board members for Ithmaar Bank are as follows:
SSB’s Functions and Responsibilities
The SSB’s responsibilities and functions fall within the scope of banking transactions, but not administrative affairs, and shall include the following:
- Approval of Sharia`a aspects in the Memorandum and Articles of Association and in the regulations, forms and policies followed by the Bank.
- Approval of the agreements and standard and non-standard contracts related to financial transactions conducted by the Bank with shareholders and investors, etc. after looking into them from Sharia`a aspects and taking part in amending and improving the said forms, if required, as well as examining contracts which the Bank intends to conclude and which do not have standard forms previously used, for the purpose of verifying that the said contracts, agreements and transactions are free of Sharia`a prohibitions.
- The SSB shall give a Sharia`a opinion on the products which the Bank intends to offer and issue Fatwas on Sharia`a issues which the Bank follows in conducting transactions.
- The SSB shall follow the Bank’s operations and examine its activities from a Sharia`a aspect within the periods specified in co-ordination between the SSB and the management and ensure that the transactions concluded are for products and contracts approved by the SSB, through regular reviews of the practical steps and audit of documents from a Sharia`a aspect to ensure that Sharia`a requirements are not violated. This review shall include rectification and correction of transactions or to settle obligations and rights in accordance with the principles of Sharia`a.
- Examination of the activities of investment funds and subsidiary companies overall, failing which every fund and company should appoint its own SSB.
- The SSB shall propose and submit the possible Sharia`a solutions to the problems of financial transactions which are not consistent with the rules and principles of Islamic Sharia`a and contribute, in co-operation with the Bank’s management, towards finding alternatives to the products which contravene Sharia`a rules.
- It shall provide guidance and advice to the Bank’s management through the conduct of Islamic financial transactions to help it achieve compliance with Islamic Sharia`a rules and principles.
- It shall give the Sharia`a opinion on the Bank’s financial statements within the periods specified in co-ordination between the SSB and the management.
- The SSB shall ensure avoidance of gains made from sources or through methods that are repugnant to the rules and principles of Islamic Sharia`a and spend them in general charitable purposes.
- The SSB shall examine sources of income, expenses, assets and liabilities in the financial statements in accordance with Sharia`a rules and principles.
- It shall submit an annual report to be discussed during the Bank’s annual general meeting, in which the SSB shall give its opinion on the transactions conducted by the bank and the management’s compliance with the Fatwas and resolutions issued by it at the end of every financial year.
- It shall give recommendations on the training courses required by the Sharia`a reviewer to carry out internal Sharia`a review duties, as well as the banking events which it deems necessary for the Sharia`a reviewer to participate in and attend.
- The SSB shall be concerned, in exclusion of other bodies, with the resolution settlement of any difference of opinion that may arise between the Bank’s management and the Sharia`a reviewer in respect of the Sharia`a aspects of banking transactions.
- It shall assist in developing the Bank’s products and devise and introduce new products, while upgrading the necessary contracts.