The Islamic Financial Services Board (IFSB) has published answers to selected frequently asked questions (FAQs) on four of its standards and guidelines.
The four are:
- Guiding Principles on Shariah Governance Systems for Institutions Offering Islamic Financial Services (IFSB-10), published in December 2009;
- Standard on Solvency Requirements for Takaful Undertakings (IFSB-11), published in December 2010;
- Revised Capital Adequacy Standard for Institutions Offering Islamic Financial Services (IFSB-15), published in December 2013; and
- Guidance Note on Quantitative Measures for Liquidity Risk Management in Institutions Offering Islamic Financial Services (GN-6), published in April 2015.
IFSB secretary general Dr Bello Lawal Danbatta stated, “With the issuance of the first set of FAQs on selected IFSB standards, the IFSB has taken an important additional step in supporting regulatory and supervisory authorities and Islamic finance industry market players by providing appropriate technical elaboration and guidance.”
He further said, “The IFSB Secretariat plans to publish FAQs for other IFSB standards in future and will update the existing ones from time to time with a view to enhancing the understanding and supporting wider implementation of IFSB standards for promoting its global implementation.”
IFSB is an international standard-setting organisation for the Islamic financial services industry, and in its mandate to promote understanding and adoption of its standards, regularly conducts capacity building workshops, provides technical assistance and policy advice, and offers comprehensive e-learning programmes.
These FAQs are available on the IFSB website under the ‘Standards Development’ section.
MoU with AAOIFI
Meanwhile, the IFSB has signed an MoU with Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to jointly undertake technical activities relating to development and revision of prudential, shariah, accounting and governance standards.
In a statement, the IFSB stated that the duo also agreed to work together in raising awareness of emerging issues in the Islamic financial services industry.
AAOIFI and IFSB have traditionally worked separately on their respective mandates. The AAOIFI focuses on accounting and auditing standards, while the IFSB develops prudential rules in areas such as capital adequacy and disclosure requirements.
Dr Danbatta said this MoU between the IFSB and AAOIFI paves the way for strengthening coordination and combining efforts for the sustained growth, development and resilience of the Islamic financial services industry.
Islamic finance is growing fast across markets in Africa, the Middle East and Southeast Asia, but it remains a fragmented industry with uneven implementation of rules, which could stunt growth.
AAOIFI acting secretary general Omar Mustafa Ansari said, “The industry must have its footings on strong and sustainable principles, and both the institutions need to strive for that together.” M