Strengthening the Relationship between Shariah Committee and Board of Directors of Islamic Banks

Abstract

Shariah Committee (SC)is a key person in ensuring the Islamic banking business of Islamic bank comply with Shariah principles. The Board of Directors (BoD) of Islamic bank also the key person to oversee the entire operation and activities of Islamic bank. The roles and responsibilities of these two bodies are crucial to the Islamic bank. In principle, the two bodies are to complement each other to monitor the Shariah compliance of Islamic bank. However, in reality there is a gap between the SC and the BoD in carrying out their roles and responsibilities in the running of Islamic banking business. This study is carried out to seek the opinion of SC in order to bridge the gap between the two bodies and to find out the best method to be offered to the Islamic bank in this regard. The data of thematic analysis is gathered from the interview of selected nine respondents. The finding shows that the gap exists between SC and BoD in several ways and several factors contributed to it. Among the three methods to be implemented in order to bridge the gap between them, it seems that the appointment of SC member to sit in the BoD is a preferred method. Several steps need to be done in order to bridge the gap between these two significant bodies of the governance structure of Islamic bank.