Dubai-based Minhaj Sharia’h Financial Advisory and Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOFI) have launched a set of 11 new Sharia’h standards for Islamic financial institutions.

Commenting on the launch, Minhaj and AAOFI said these Sharia’h standards will help FIs tackle contemporary issues of banking, finance and investment.

The new Islamic norms have been conceived in the wake of the challenges faced by the Islamic FIs in the current times and paves the way for them to sort out a variety of issues in the light of Islamic jurisprudence.

Speaking at the launch ceremony, Sheikh Dr Abdul Sattar Abu Ghuddah, Minhaj chairman, said these standards will have great positive impact on the growth of the Islamic financial industry.

'Moreover, the launch of these standards is also a salient indication of the constant evolution of Islamic banking and finance with contemporary focus, particularly in the aftermath of the global financial crisis,' he explained.

He said that the 11 new standards stipulate Sharia’h-compliant ways to sort out issues arising from uncertainty (gharar) in financial transactions and arbitration, endowments (waqf), labour leasing (ijarah), zakah, contingent obligations, credit facilities, online financial transactions, pledge (rahn), investment accounts and profit distribution, and Islamic reinsurance.

“These laws also have brought in greater harmonization to the Sharia’h principles which will help further the growth of the Islamic banking and finance,” Abu Ghuddah said.

On the need for new Shari’ah laws, Khairul Nizam, AAOIFI assistant general secretary, said: 'Despite the economic meltdown, the Islamic finance and banking sector has shown considerable resilience and has kept a pace of growth.'

'This is because we have been able to adapt to the economic changes and innovate on Sharia’h principles to the benefit of the Islamic society and economy across the world. The new standards are launched in this perspective,' he added.

He said over 90 per cent of the Islamic banks around the world go by the AAOFI standards.

“The new standards will contribute to the growth and evolution of   Islamic financial industry which now has Sharia’h-compliant assets estimated at $1.275 trillion. The industry is growing at an average annual rate of 15-20 per cent and the positive trend will continue despite economic fluctuations thanks to the in-built prudence in Sharia’h principles,” Nizam added.

The launch ceremony of the new Sharia’h standards was attended by the key sponsors of the event, Noor Islamic Bank, Abu Dhabi Islamic Bank and Al Hilal Bank, and a host of senior executives of major Islamic FIs.

Dr Mohammed Amin Qattan, Shari’ah advisor, Minhaj, said, “The new standards addresses crucial issues of complexity seen in contemporary Islamic banking and finance, particularly in the financial services sector,  including issues like debt restructuring and arbitration cases – which has risen in the wake of the financial uncertainty.'

'What is of significance is that all these issues of a contemporary nature can be addressed by laws of Islamic jurisprudence and that in itself is a great leap forward,' he added.

Since the beginning of last year, 14 new standards have been adopted and the total number of the existing AAOFI standards number over 84.

The development of AAOIFI’s standards was undertaken by its Sharia’h Board – acknowledged as the leading global authority on Shari’a for international Islamic finance – and accounting and auditing standards board.

Amjed Naser, head of Shari’ah, Noor Islamic Bank said: “As an Islamic bank, we look at the launch of the new Sharia’h standards as a milestone exercise, bringing us more clarity and transparency to face the challenges of the new realities of Islamic economy.'

'We congratulate Minhaj and AAOFI for the launch and adoption of these standards,' he added-TradeArabia News Service