RELIGIOUS SUPERVISORY BOARDS AND ISLAMIC BANKING
The most widely used approach to ensuring the islamicity of Islamic banking at private sector level, particularly in the Middle East, is that of the Religious Supervisory Board (RSB). Islamic banks employ scholars of Islamic law in a consultancy and advisory capacity to examine their contracts, dealings and transactions. This is to ensure that the day-to-day activeties of the Islamic bank in the areas of resource mobilisation and allocation are in line with the sharī'a. In this chapter we identify the general characteristics of the RSB approach by reference to the legal opinions (fatwas) issued by the RSBs of two prominent Islamic banks, namely, the Kuwait Finance House (KFH) and the Jordan Islamic Bank (JIB).1
The existence of Religious Supervisory Boards (RSBs) in almost all private sector Islamic banks operating in the Middle East in UAE, Kuwait, Bahrain, Jordan, Egypt and Sudan points, inter alia, to the religious character of these banks. In some banks, like the Jordan Islamic Bank, there is only one religious consultant, whereas in other banks such as the Faisal Islamic Bank of Egypt (FIBE), the board consists of five members at most, who are scholars of Islamic law and believe in the idea of 'Islamic banking'.2 They are given wide powers and authority to examine any contract, method, or activity relating to the conduct of their banks. According to the Articles of Association of FIBE, the RSB would have at their disposal all the means which are available to the auditors, in order to perform their functions. In their banks' annual reports the RSBs certify that the activities of their institutions are according to the sharī'a, just as independent auditors certify that the financial position of the bank is fair.
The procedure followed by these Islamic banks to ensure the islamicity of their banking and financial operations could be briefly stated as follows: the management of the bank, when it faces a banking and finance problem which needs to be looked at by the RSB, analyses the problem to some ex
1 The method followed by these RSBs in ensuring the islamicity of their operations is ap-
parently consistent with the methods followed by the RSBs in other Islamic banks in the
Middle East, and therefore, the result of this examination could be equally applicable to the
practices in those banks, allowing for some slight individual variations.
2 FIBE, Articles of Association.