Gulf Arab states may have a single Shariah board for the region’s Islamic financial institutions in five to 10 years, a Shariah scholar said in Dubai today.
A “supreme Shariah council” will help reduce the cost of issuing sukuk and boost Islamic services offered by financial institutions that comply with the religion’s ban on interest, said Hussain Hamed Hassan, head of Dubai Islamic Bank PJSC (DIB)’s Shariah committee.
Hassan, who is also chairman of the Shariah Coordination Committee of the Islamic Financial Institutions in the United Arab Emirates, told Bloomberg in June last year that the single Shariah council may be established by 2013.
The scholar criticized central banks for treating Shariah- compliant financial institutions as if they were non-Islamic companies. Only a “few” central banks were exceptions, including those in Bahrain and Sudan, he said.
Hassan also said auditing practices used for Islamic financial industry after the sale of sukuk were “dishonest” because the assets sold during the sale of Islamic bonds remain on companies’ balance sheets even after the issuer receives the funds raised. Most sukuk are based on ijarah, a sale and lease agreement as in real estate.
“If I sold assets and I took the money in my pocket, why is the asset still in my balance sheet?” Hassan asked.
The scholar serves on the Shariah boards of more than 20 Islamic financial institutions, according to data compiled by Bloomberg.