A consistent ruling on the religious compliance of certain assets and transaction structures in terms of Shariah law has yet to emerge.In the conventional arena, this can lead to uncertainty and confusion.A Shariah board has considerable discretion in the interpretation of Islamic law and may choose any school of thought to inform its decision-making process.This lack of standardization of Shariah boards’ rulings is the Achilles heel in the global acceptance and growth of Islamic finance.The differences in rulings by different Shariah boards is advantageous in a way, as it brings about more innovation and creates new room for Sukuk structures and Islamic finance instruments.In the process of providing remedies, the principles of Shariah are not to be compromised, as they are essential to a dynamic market.Establishing Shariah boards at a global and central bank level is needed to expedite and develop some standard guidelines on the conduct of Islamic financial transactions.
Conformity or similarity among the Shariah supervisory boards of Islamic financial institutions is urgently required to extend the possibilities of concept and application in the industry.
The differences in interpretation of Shariah laws also means that one Islamic bank may not be able to “copy” another Islamic bank’s products, and this can stifle the growth and integration of Islamic finance at both national and international levels.
Lack of standardization is also a contributory factor in the sluggish trading levels on the Sukuk market.
Licensed Attorney & Counselor at Law, State of New York, USA LL.
M Degree "Master of Laws" from Temple University School of Law, Philadelphia-PA-USA.