Application of Shariah governance framework in Islamic financial institutions

This chapter discusses some challenges of Shariah Committees in Islamic financial institutions in dispensing their responsibilities in mitigating the non-compliance risks. The concept of shariah governance has its foundation in the Qur'an and the Sunnah. Shariah (which literally means "the way") is the divinely ordained guidelines of conduct for Muslims in all aspects of their life, which includes financial matters. Any form of transaction, irrespective of financial or otherwise, must be free of any element of injustice to the transacting parties. For financial transactions, any element or form of activity that could be construed as 'riba' or injustice to any of the participants in the transaction is absolutely forbidden. The objective is to ensure that the operations of Islamic Financial Institutions (IFIs) are shariah compliant, failing which will result in loss of confidence and credibility that will impede the future growth of Islamic finance Industry.
The chapter is divided into nine sections. The second section discusses about
the Shariah Committee. The third section outlines the data collection. The fourth
section discusses on research methodology. The fifth section outlines research
findings. The final section concludes the chapter.