Shariah Governance Practices Of Islamic Credit Co-Operatives In Malaysia
The Shariah governance system is an important mechanism to ensure that all the activities,operations and businesses of Islamic financial institutions adhere to the Shariah precepts and requirements. Although the Shariah governance framework concept is widely discussed in Islamic banking, in the case...
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| Summary: | The Shariah governance system is an important mechanism to ensure that all the activities,operations and businesses of Islamic financial institutions adhere to the Shariah precepts and requirements. Although the Shariah governance framework concept is widely discussed in Islamic banking, in the case of Islamic Credit Co-operatives, this concept has received little attention from researchers. Hence, the purpose of this study is to explore the current practices of Shariah governance in Islamic Credit Co-operatives,particularly in its four main areas- the internal arrangement in establishing the Shariah Committee function;the roles and responsibilities of the Board of the of the Co-operatives,Shariah Committee,Management and Internal Audit Committee ;the attributes of the Shariah Committee in the term of independence,confidentiality,competency , and consistency of judgement; and also external arrangement pertaining to Shariah governance in this sector, In-depth interviews using semi-structured questions were conducted with key informants,namely,the management,Shariah Committee, ANGKASA 's Shariah Unit and with the regulator.All the interview questions were generated, structured and arranged in a way that all the data could be analysed easily using the thematic analysis approach.This study identified a serious gap in the Shariah governance system practiced by Islamic Credit Co-operatives ,due to the perfunctory attitude of the co-operatives for internal Shariah control system to support governing system.This study also found that the Co-operatives are passive and still at the basic stage of implementing good Shariah governance even after the issuance of GP28: The Guidelines of Shariah Governance for Co-Operatives . In addition,while exploring the attributes of the Shariah committee in this sector, this study demonstrates that the Shariah Committee is still in conflict when dealing with the five issues - independence , confidentiality , competency ,consistency , and transparency. Moreover , this study concluded that the nominal approach by the regulator is the root cause of the current state of Shariah governance in this sector. This position acknowledges that there are shortcomings and weakness to the existing Shariah governance framework that need further enhancement and improvement at the co-operatives and regulatory level. Thus , this study offers useful information resources that provide some relevant recommendations to the policymakers, co-operatives , and researches for future development of Shariah governance practices in Islamic Credit Co-operatives . Furthermore,this study attempts to provide fresh data and significant information pertaining to the current state of Shariah governance in Islamic Credit Co-operatives . The discussion in this study can also serve to enhance the literature on the topic. |
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