STANDARDS ABSTRACTED FROM RESOLUTIONS OF SHARI'A BOARD OF BANK ALBILAD

Introduction

Praise be to Allah, and Peace and Blessings be upon the Messenger of Allah, Muhammad Ibn Abdullah, his Household, his Companions and those who follow him until the Day of Resurrection.

Based on the policy of Bank Albilad which states that the dealing and operation of the bank will be compliant with the rulings of the Islamic Shari’a, the Shari’a team was formed and they commenced their work along with the foundation team of the Bank early in 1425 A.H., corresponding to 2004 A.D. before the bank"s foundation license was issued by the Royal Decree No. M/48 on 21st of Ramadan 1425 A.H., (corresponding to 4th November 2004 A.D.).

Currently, the Shari’a Board of Bank Albilad consists of following six reputable scholars:

1.tSheikh Abdullah bin Sulaiman bin Al-Manea, (Head of the Shari’a Board).

2.tProf. Dr. Abdullah bin Muhammad Al-Mutlaq, (Deputy Head of the Board).

3.tProf. Dr. Abdullah bin Mousa Al-Ammar.

4.tDr. Muhammad bin Saud Al-Osaimi.

5.tDr. Abdulaziz bin Fawzan Al-Fawzan.

6.tDr. Yusuf bin Abdullah Al-Shubaili.

At inception, the Board was consisting of the last four mentioned members, however, later on during the year of 1427 A.H. (2006 A.D.), Sheikh Abdullah bin Sulaiman bin Al-Manea (Head of the Board) and Prof. Dr. Abdullah bin Muhammad Al-Mutlaq (Deputy Head of the Board) joined the Board. In the same year, the Shari’a Board issued its resolution No. (82) constituting the «Preparatory Committee of the Shari’a Board». This Committee is branched from the Shari’a Board and consists of four of its members. The Committee"s mission is to study the issues submitted to the Shari’a Board and make resolutions regarding the urgent matters. The resolutions and works of the Preparatory Committee are presented to the Shari’a Board so that it makes the final resolutions regarding them. The Shari’a Board and its Preparatory Committee consist of the same members until the date of the publication of this book. 

From Corporate Governance perspective, the Shari’a Board is an independent body and it reports to the General Assembly. The Board’s regulation states its objectives, missions, authorities and responsibilities. In addition to the Shari’a Board, the bank has formed Shari’a section which operates as any other department in bank for day to day functions; however, it simultaneously works independently under the supervision of Shari’a Board.

The Shari’a section is responsible for meeting the requirements of the Shari’a Board as well as implementing the Shari’a strategy for the bank. Functionally, this section is divided into two departments:

First; the Shari’a Board Advisory Department: It is entrusted with the task of preparing the studies and researches, organizing and coordinating the works of the Shari’a Board, reporting, archiving and documenting its resolutions and instructions, as well as its records and notes. In other words, the Shari’a Board Advisory Department works as a bridge between the bank and the Shari’a Board.

Second, the Shari’a Audit Department: Its role is to ensure that all the Bank’s operations and transactions have been approved by the Shari’a Board and that they are executed and implemented in compliance with the relevant resolutions issued by the Shari’a Board.

During eight years of work (1425-1432 A.H / 2004-2011 A.D.), the Shari’a Board and its Preparatory Committee have scrutinized many products, contracts, agreements, supervisory notes, financial statements, Zakat-related issues and various other items. As a result, the Board has issued more than 1500 resolutions and instructions addressing major and inclusive issues, as well as partial and executives issues. Most of the resolutions and instructions issued by the Board have been issued with the consensus of all members, while some others have been agreed by the majority of members, in those cases, contradictory viewpoints are recorded and mentioned.

The Board relies on the rules of Istidlal (legal reasoning) approved by the scholars, observing the Shari’a objectives for transactions, overweighting the opinions evidenced by stronger proof regarding matters disagreed upon by the scholars, and following the Takhrij (analogical deduction) approach for contemporary issues. It also pays attention to conformity with the collective Ijtihad-based opinions, such as the resolutions issued by the Council of Senior Ulema in Saudi Arabia, Islamic Fiqh Academy of the Muslim World League, International Islamic Fiqh Academy of the Organization of Islamic Cooperation, and Standards of the Shari’a Council of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Moreover, the Shari’a Board considers and refers to the resolutions issued by other Shari’a Boards in other Islamic financial institutions.

Accordingly, the Shari’a Board Advisory Department has a great desire to share the internal scholarly outputs and to encourage the Islamic banking field by publishing these standards after organizing, rectifying and formatting them in a way that realizes the best possible benefits. This can be achieved through the use of brief standard statement in a way that makes such summary not only a good reference for the Shari’a Board and its Advisory Department at Bank Albilad, but also for bankers, researchers and those interested in the Islamic Finance field.

Role of the Shari’a Board Advisory Department in the Book

To achieve this work, the Shari’a Board Advisory Department has adopted the following methodology:

1.tCollecting the resolutions, instructions, reports and notes issued by the Shari’a Board and its Preparatory Committee.

2.tExtracting the issues that build or outline a Shari’a ruling and arranging each issue in a separate standard.

3.tReforming the extracted issues in simple and precise statements that can be understood without the need to read the context where the views are mentioned, along with adhering to the terms used by the Shari’a Board and its Preparatory Committee whenever possible.

4.tGathering issues of similar nature in one standard and separating other issues in different standards based on Ijtihad and discretion without affecting the Shari’a rulings by any means.

5.tCategorizing the book, using subtitles, into chapters based on the bank’s operations and products.

6.tCreating an index that includes keywords quoted from a number of relevant chapters of Fiqh transactions and banking terms. Under each term all numbers of relative standards are written for easy reference for the reader to reach his goal in a way other than that based on the bank"s works and its products.

7.tPresenting the final work at various meetings of the Preparatory Committee, where the Committee made some amendments to it.

8.tSubmitting the final work issued by the Preparatory Committee to the Shari’a Board; where the Board has made some amendments to it, and gave approval and recommendation to publish, distribute and translate it.

Further to afore-mentioned methodology used to complete the work, the Shari’a Advisory Department would consider it necessary to highlight the following points:

1.tThis work/book is published for record purpose and covers the rulings that have been issued by the Shari’a Board and its Preparatory Commit-tee. We do not claim that this work is all inclusive. Points which are commonly known and understood are intentionally left out. Thus, the reader may notice a detailed coverage of certain points while other clear points are not mentioned. This is because no ruling concerning these well-known points has been issued.

2.tAs the work adopted the approach of abbreviation, it has abbreviated the resolutions and instructions issued in standard articles characterized by precision and abridgment, omitting the unnecessary details. The reason why the work is arranged this way is that the reader does not often need all the details and minutes included in the resolutions and instructions, such as the number, date and place of the meeting, the sender and the recipient...etc. Moreover, the reader may not need to view the resolutions and instructions that are issued to confirm prior resolutions, to permit an action or to tackle any other matter that does not include a Shari’a ruling. In other word, this book, which consists of more than two hundred pages, would require more than three thousand pages if the resolutions and instructions were published in original form.

3.tFollowing advisors of the Shari’a Board Advisory Department have participated in this work (Names are alphabetically arranged):

Abdul-Rahman bin Saud Al-Ankari.

Abdullah bin Ibrahim Al-Bassam.

Ali bin Muhammad Noor.

Ammar bin Abdullah Al-Hajjaj.

Dr. Khalid bin Muhammad Al-Sayari.

Majed bin Abdul-Rahman Al-Rasheed.

Dr. Mustaein bin Ali Abdul-Hamid.

May Allah, the Almighty, bless them All and make this work a part of their good deeds.

The Objectives behind Preparing and Publishing This Book: 

1.tAchieving a number of the objectives and missions of the Shari’a Board which are included in its regulation, such as:

a)tStrengthening the Bank’s participation in defining and developing the Islamic banking.

b)tParticipating in spreading awareness about the Islamic banking in Bank Albilad and in other aspects of the society.

tThis work falls within the Shari’a Board"s jurisdictions, as stated in its regulation, namely: “The original ruling concerning the resolutions issued by the Shari’a Board are to be published save those are excluded by the Shari’a Board”.

2.tDocumenting the work of the Shari’a Board and keeping it in a unified form so that it can be easily accessed and referred to, especially those important issues that are difficult to be explained. 

3.tFinding an experiment-based practical guide for those who want to establish an Islamic banking business.

4.tSharing the resolutions and works made by the Shari’a Board of Bank Albilad with other Shair"a Boards in other Islamic institutions since these Boards have a great deal of similar works, which helps avoiding repetition and saving time and effort for other activities that need more study and research.

5. tEnriching the scholarly arena with banking materials that benefit the bankers, researchers, and those interested in the field of Islamic banking.

6.tPreparing these standards to satisfy the future fiqhi or regulatory need for the Islamic banking field. 

Finally, it is important to highlight that the Shari’a Board Advisory Department worked diligently for more than one year to formalize these standards. We are hopeful that this work will inspire new ideas and we will improve and rectify this book in light of the opinions and comments of the reader. This is especially because some ideas and improvements have emerged during the preparation of this book; however, we decided not to include these ideas in this stage and chose to produce the book in its current form for timely publication of this book. May Allah help us to add these new ideas and improvements along with the comments and ideas that would be suggested by the readers later on.

We are hopeful that this book published based upon the Shari’a Board rulings would be stepping stone for other Shari’a Boards and they will follow suit. There is no doubt that introducing such products for those who are interested is an indication of transparency and clarity of methodology; rather it is a guideline for ourselves and the clients in particular and for the Islamic Finance field in general.

We ask Allah to make our efforts sincere and to forgive us for our wrong and forgetfulness. Allah knows best, and Peace and Blessings be upon our Prophet Muhammad, his Household and his Companions.