Islamic Research and Training Institute (IRTI)

Institut Penyelidikan dan Latihan Islam atau Islamic Research and Training Institute (IRTI) ditubuhkan pada tahun 1981 dengan tujuan untuk membuat penyelidikan, menyediakan latihan dan maklumat perkhidmatan kepada negara ahli Bank Pembangunan Islam atau dalam bahasa inggerisnya Islamic Development Bank (IDB) dan masyarakat Islam yang bukan ahli bagi membolehkan aktiviti ekonomi, kewangan dan perbankan di negara Islam mengikut kehendak syariah. Selain itu membantu mereka membangunkan aktiviti ekonomi, kewangan dan perbankan serta mengembangkan ekonomi dan kerjasama antara mereka. Institut ini juga bertujuan mengadakan kemudahan latihan untuk tenaga kerja yang terlibat dalam aktiviti pembangunan ekonomi di negara-negara ahli. Fungsi-fungsi institut ini pula adalah seperti di bawah:-

1) mengatur dan menyelaras penyelidikan asas dan lanjutan dengan tujuan membangunkan model dan kaedah bagi penggunaan Syariah dalam bidang ekonomi, kewangan dan perbankkan.

2) menyediakan latihan dan membangunkan tenaga profesional dalam ekonomi Islam bagi memenuhi keperluan penyelidikan dan agensi pemerhati Syariah

3) Melatih kakitangan negara-negara ahli yang terlibat dalam aktiviti pembangunan.

4) Mewujudkan pusat yang mengumpul, mengatur dan menyebar maklumat dalam bidang yang berkaitan dengan aktivitinya.

5) melaksanakan akitiviti yang boleh membantu mencapai tujuan penubuhannya.

IRTI mempunyai empat bahagian iaitu Islamic Economics, Cooperation and Development Division (IECD), Islamic Banking and Finance Division (IBFD), Training Division (TD) dan Information Centre (IRTIC). Selain itu, IRTI juga mempunyai tiga unit sokongan iaitu Special Assignment Unit, Administrative Services Unit dan Publications Unit.

Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI).

Pertubuhan Perakaunan dan Pengauditan Institusi Kewangan Islam atau AAOIFI ialah sebuah badan bebas yang tidak bermotifkan keuntungan dan ditubuhkan pada 27 Mac 1991 di Bahrain. Pertubuhan ini awalnya dikenali sebagai Financial Accounting Organization for Islamic Bank and Financial Institutions (FAOIBFI) bertujuan menjadi badan yang menyediakan piawaian perakaunan, pengauditan, kawalseliaan, etika dan perkara berkaitan syariah untuk institusi kewangan Islam. Struktur organisasi terbahagi kepada enam iaitu Perhimpunan Agung (General Assembly), Lembaga Pemegang Amanah (Board of Trustee), Lembaga Piawaian Perakaunan dan Pengauditan (Board of Accounting and Auditing Standards), Lembaga Syariah (Sharia Board), Jawatankuasa Eksekutif (Executive Committee) dan Sekreteriat Agung (General Secretariat). Semenjak penubuhannya, AAOIFI telah berjaya menerbitkan 3 penerbitan utama iaitu Piawaian Perakaunan, Pengauditan dan Kawalseliaan untuk Institusi Kewangan Islam, Piawaian Syariah dan Penyata untuk Tujuan dan Pengiraan Nisbah Kecukupan Modal Bank Islam. Secara amnya negara yang terlibat dengan AAOIFI adalah seperti Bahrain, Sudan, Qatar, Mesir, Jordan, Turki, Bahamas, Malaysia, Indonesia, Brunei, Pulau Cayman, Sri Langka, Tunisia, Arab Saudi, Rusia dan Emiriyah Arab Bersatu. Ahli pengasas pula terdiri daripada Bank Pembangunan Islam di Arab Saudi, Dar al-Mal al-Islami di Switzerland, al-Rajhi Banking and Investment Corporation di Arab Saudi, Kumpulan Dallah Albaraka di Arab Saudi dan Kuwait Finance House di Kuwait.

General Council for Islamic Banks and Financial Institutions (GCIBFI).

Majlis Agung Bank-bank dan Institusi Kewangan Islam atau (GCIBFI) berpusat di Manama Bahrain dan ditubuhkan pada bulan Mei 2001. Kebanyakkan anggotanya datang dari negara Emiriyah Arab Bersatu, Kuwait dan Malaysia. Majlis ini dianggotai oleh bank-bank dan institusi kewangan Islam dari seluruh dunia dan terdiri daripada bank perdagangan Islam, bank saudagar, institusi kewangan yang melaksanakan konsep jendela, dana Islam dan Syarikat takaful. GCIBFI ialah sebuah badan pemberi khidmat bagi menambahkan lagi keupayaan ahli-ahlinya di seluruh dunia untuk memberikan perkhidmatan kepada pelanggannya melalui amalan perbankan yang telus. Struktur organisasi Majlis ini terdiri daripada Perhimpunan Agung (General Assembly), Lembaga Pengarah (Board of Directors), Jawatankuasa Eksekutif (Executive Committee) dan Sekretariat Agung (General Secretariat). Peranan Majlis antaranya:-

1) Menyediakan senarai atau direktori bank-bank dan institusi kewangan yang patuh kepada etika Islam.

2) Menganjurkan konfrens di tempat-tempat penting di serata dunia.

3) Mencari jalan dan kaedah yang akan menambahkan pengetahuan dan kefahaman pelanggan mengenai konsep kewangan dan perbankan Islam.

4) Bertindak sebagai pembekal sumber dan kepakaran kepada ahli-ahli untuk melatih tenaga kerja, bantuan teknikal, konfrens dan seminar.

Sebagai penyedia dan pembekal maklumat, GCIBFI menerbitkan banyak penerbitan hasil penyelidikan dan sebagai pusat yang membuat kajian perbandingan berkaitan dengan perundangan dan bidang-bidang lain.

International Islamic Financial Market (IIFM).

Pasaran Antarabangsa Kewangan Islam atau IIFM ialah sebuah pertubuhan yang tidak bermotifkan keuntungan dan penubuhannya adalah hasil usaha yang dimulakan oleh Bank Negara Malaysia dan LOFSA yang berpandangan perlunya ada sebuah pasaran untuk memobilisasikan sekuriti kewangan Islam. Lima perintis yang bersama-sama dengan Malaysia dalam menjayakan penubuhan ini ialah Bank Pembangunan Islam (IDB), Pihak Berkuasa Kewangan Bahrain, Bank Indonesia (Bank Pusat Indonesia), Bank Pusat Sudan dan Kementerian Kewangan Brunei. Visi badan ini adalah untuk menjadi sebuah institusi terkemuka yang akan menggalakkan urus niaga produk dan instrumen kewangan Islam di persada antarabangsa. Misinya pula adalah untuk menjadi badan yang akan membantu dan mempermudahkan urus niaga di pasaran kedua produk dan instrumen kewangan dengan mengadakan pengesahan bebas Syariah dan mengeluarkan panduan-panduan untuk menerbitkan instrumen kewangan yang baru. Objektif badan ini adalah seperti berikut:-

1) Menggalakkan dan memperbanyakkan pengwujudan dan pembangunan pasaran kewangan antarabangsa berdasarkan peraturan dan prinsip Syariah.

2) Mewujudkan persekitaran yang menggalakkan kedua-dua institusi kewangan Islam dan bukan Islam terlibat secara aktif di pasaran kedua.

3) Menyelaras dan bertindak sebagai pusat setempat untuk mengharmonikan tafsiran dan pandangan Syariah dalam pasaran kewangan global.

4) Menambahkan kerangka kerjasama antara institusi kewangan Islam di serata dunia.

5) Mewujudkan persamaan dan meninggikan pasaran dengan mengeluarkan panduan kepada peserta yang mengeluarkan dan memasarkan produk dan instrumen kewangan Islam.

Pada masa kini aktiviti utama yang dijalankan oleh IIFM meliputi tiga perkara utama iaitu memberikan pengesahan Syariah, mengadakan piawaian dan pengharmonian dan penyenaraian pasaran dan urus niaga. Struktur organisasinya pula terdiri daripada Lembaga Pengarah, Jawatankuasa Pengawasan Syariah, Jawatankuasa Pembangunan Pasaran dan Produk dan Eksekutif Pengurusan.

Islamic Financial Services Board (IFSB).

Lembaga Perkhidmatan Kewangan Islam atau IFSB ditubuhkan pada 3 November 2002 khusus mengendalikan perkara yang berkaitan dengan penyeliaan dan pengawalan. Lembaga ini ditubuhkan di Malaysia di bawah Akta Lembaga Perkhidmatan Kewangan Islam 2002, dan mendapat keistimewaan sebagai organisasi berstatus diplomat. Matlamat penubuhan IFSB ialah sebagai badan yang menyatukan pihak berkuasa kewangan negara-negara terutamanya negara yang mempunyai sistem perbankan Islam agar sistem yang dilaksanakan menjadi lebih kukuh dan stabil. Tugas utama Lembaga ini adalah mengeluarkan piawaian-piawaian dan peraturan yang ada hubungan dengan sistem kawalan bank-bank Islam. Dari segi keanggotaannya pula, terbahagi kepada tiga bahagian iaitu ahli penuh yang terdiri daripada pihak berkuasa kewangan sesebuah negara atau bank-bank pusat, ahli bersekutu pula terdiri daripada pertubuhan yang ada kaitan dengan kewangan dan akhir sekali ahli pemerhati yang terdiri daripada institusi-institusi kewangan Islam di seluruh dunia.

Shariah Requirements for conventional banks

By Sheikh Nizam Yaquby
Shariah Scholar
Bahrain

Many conventional banks and financial institutions are increasingly becoming interested in Islamic finance and investment. How can these conventional banks and institutions enter this market? Is it possible or not? This paper is an initial attempt to lay down the conditions necessary for conventional institutions to comply with and implement when doing so. The most important of these required conditions are: complete segregation of funds; the existence of a Sharia supervisory board; management committed to Islamic financial concepts; safeguarding Muslim investors' funds from negligence, trespass, and fraud; and compliance with the standards of the Accounting and Auditing Organization for
Islamic Financial Institutions (AAOIFI).

Introduction

This write up is a modest contributory note that sets out the most important conditions to be fulfilled when conventional banks and financial institutions, their Articles of Association of which do not comply with the tenets of Islamic law (the sharia), set up any Islamic bank, window, or fund. The importance of this issue cannot be overstated, particularly in view of the wide spread of this trend, over the past few years, and the oft-repeated claims by many parties that their transactions and dealings fully comply with the provisions of the sharia when subjected to scrutiny and examination, this proves otherwise. Little or no research appears to have been conducted on this matter, and therefore this note is a beginning toward this end. It is hoped that specialist research and studies by scholars and academics will follow.

Forms of collaboration and their permissibility
Before delving into the details of these requirements, we have to note that cooperation and overlap between Islamic and conventional financial institutions in managing investments has taken several forms. These include the following:

1) An Islamic financial institution (IFI) offers an investment portfolio, backed by its sharia expertise, but vests management of this portfolio in an external investment manager who undertakes to comply with the IFI's conditions and applies the criteria and standards laid down by the IFI when managing investment.

This is permissible under the sharia if the investment manager complies with the Islamic conditions and his or her success has been proven in more than one instance.

2) A conventional financial institution or bank sells and markets an Islamic product, introduced and planned by an IFI through its sharia expertise. This is also sanctioned by the sharia if it has been proved successful in more than one practical example.

3) Alternatively, a conventional financial institution or bank opens an "Islamic window" on its premises, introduces an investment product marketed as "Islamic," such as a fund, or sets up a private Islamic bank or company. This is the subject of the present discussion.

Some scholars believe that this is not permissible, because conventional financial institutions do not comply, in the first place, with the sharia in terms of their incorporation and statutes. If they do not comply with Islamic law in their basic charters, how can they claim to comply with it in their funds, branches, or windows?

In addition, the funds of these conventional financial institutions are drawn from prohibited earnings, so how can they invest unlawful funds in Islamic products? The rationale cited by scholars is that these financial institutions or banks are only intent on exploiting practicing Muslim investors and in so doing unfairly compete with Islamic financial institutions.

On the other hand, there is a group of contemporary scholars who permit this type of investment product as long as the sharia conditions laid down for them are satisfied. They argue that dealing, in compliance with the teachings of the sharia, in transactions and their Islamically sound contracts is not confined to a certain group of people. In this view, it is permissible-indeed incumbent-upon whomever can conduct dealings in accordance with the provisions of the sharia to do so. If it is impossible to do so in all contracts, at least one should start with those that are possible. In response to the argument that the source of these funds is unlawful earnings, one may reply that there is nothing to prevent such funds from being purified, cleansed, and subsequently directed to lawful and permissible channels. Jurists say that it is permissible to deal with commingled (mixed) funds-funds that are not purely lawful funds, but rather are mixed, containing both lawful and unlawful money. This is as stated by Ibn Taymiyyah, in his Collection of Fatawa, and by other eminent scholars.

Moreover, the claim that traditional financial institutions desire to unfairly compete with Islamic financial institutions can be refuted by saying that competition is always in favour of the most suitable, efficient, and fittest. This kind of competition may prompt Islamic financial institutions to exercise more diligence and care to introduce better quality products and conduct their activities more efficiently. This is in fact evident in many nations in which competition exists.

On the other hand, conventional financial institutions may gradually convert into full-fledged IFIs if they find this viable and if they have acquired adequate practical experience and sharia practices in this field. There are practical examples to substantiate this argument.

Among scholars and jurists who hold this view are Yusuf AI Qaradawi, Abdul-Sattar Abu Ghuddah, M. Taqi Usmani, Nazih Hammad, Abdullah Al Muslih, and Abdullah bin Sulaiman Al Manea. Economists who also espouse this view include M. Ali Elgari and Monzer Kahf. They all concur that the required conditions, outlined below, necessitate strict compliance.

Required conditions

The most important of these required conditions are: complete segregation of funds; existence of a sharia supervisory board; management that is committed to Islamic financial concepts; safeguarding of Muslim investors' funds from negligence, trespass, and fraud; and compliance with the standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

a) Complete Segregation of Funds

The funds of the Islamic investment product and those of the financial institution in which sharia provisions are not observed must be completely segregated. The funds of investors who are very diligent and anxious to earn lawful income should not be commingled with those of conventional investors who are not observant of the sharia. Therefore, there should be separate accounts, books, and computer programs evidencing this complete segregation of funds. This matter is not difficult or problematic in view of the availability of modern computer systems, assuming that intentions are sincere and the required expertise is available. This compliance should be enshrined and expressly stated in the statutes or the prospectus.

b) Sharia Supervisory Board

There should be a sharia supervisory board for any institutional Islamic investment body, and that Board should consist of trustworthy scholars who are highly qualified to issue fatawa (religious rulings) on financial transactions. In addition, they ought to have considerable experience with knowledge of modern dealings and transactions. The Articles of Association, prospectuses, or statutes (depending on the type of activity) should provide for the existence of a sharia board, whose fatawa and resolutions should be binding upon the financial institution's management. It should be independent and free to give opinions on proposed contracts and transactions. The role of the sharia supervisory board should be concurrent with that of the financial institution itself in the sense that it should be formed from the moment the financial institution is incorporated, and that it should provide continued supervision and permanent checking of contracts, transactions, and procedures. This should be expressly provided for in the Articles of Association or the prospectus.

c) Managerial Commitment

The financial institution's management, which is undertaking such business activities, should be fully convinced of the concept and fully committed and dedicated to it. It should be anxious to implement it and comply with the teachings governing it. Unless the entire management is committed and convinced, the business activities and the enterprise will not be foul free or will not escape irregularities and deviation. Regardless of how strict and stringent fatawa and contracts are, this will not ensure sound practices if there is no one sufficiently sincere and committed to implement the principles. However, there is no harm in starting first with the executive senior management, which implement resolutions and subsequently trains the other members of the administrative team. The general manager himself should act as a springboard and set a good example for all in this respect.

d) Safeguarding Muslim Investors' Funds

It is an established principle in Islamic law that the mudarib does not guarantee the mudaraba capital for the capital provider. Hence, investment accounts in Islamic financial institutions are not guaranteed by the mudarib. However, this does not prevent the laying down of a stipulation requiring that the parent conventional financial institution (the original company) guarantee Muslim investors' funds against trespass, negligence, and fraud. Major financial institutions may sometimes shirk their responsibility in this connection by claiming that their Islamic windows, branches, or sections are privately incorporated, among other reasons and excuses. This is wholly unacceptable. Precautions should be taken to guard against this, and a similar policy should be expressly stated in the Articles of Association or the prospectus of the financial institution.

e) Compliance with AAOIFI Standards

The Accounting and Auditing Organization for Islamic Financial Institutions has issued and published a number of accounting and auditing standards that all Islamic financial institutions should comply with and implement. The AAOIFI's activities are considered a fundamental groundwork that underpins Islamic banking activities by keeping them away from individual, personal reasoning. The collective personal reasoning (ijtihad) of the AAOIFI is highly important in this vital aspect of Islamic economic life. Therefore, these standards deserve strict adherence. A number of government authorities and central banks in certain countries have circulated these standards and obliged other financial institutions to comply with them. That is why any party wishing to incorporate or set up an Islamic financial institution should be required to conform to these standards in order to avoid confusion, misunderstanding, and ambiguity, and to seek clarity and sound business activities.

Conclusion

Islamic investment, with its governing sharia rulings and provisions, is an open area for all those wishing to give it a try, provided that they approach it from its front door. They ought to comply with its provisions and honestly deal with people in their communications and transactions. For those who are intent on fraud, cheating, and misleading, all that can be said is that "he who cheats us is not one from us."

Konsep Perbankan Islam

Islamic Banking Concepts

Wadiah Yad Dhamanah (savings with guarantee)

Refers to goods or deposits, which have been deposited with another person, who is not the owner, for safekeeping. As wadiah is a trust, the depository becomes the guarantor and, therefore guarantees repayment of the whole amount of the deposits, or any part thereof, outstanding in the account of depositors, when demanded. The depositors are not entitled to any share of the profits but the depository may provide returns to the depositors as a token of appreciation.

Mudharabah (profit-sharing)

Refers to an agreement made between a capital provider and another party who acts as the entrepreneur. This arrangement will enable the entrepreneur to carry out business projects and profits are distributed based on a pre-agreed profit sharing ratio. In the case of losses, the losses are borne by the provider of the funds.

Musyarakah (joint venture)

Refers to a partnership or joint venture for a specific business, whereby the distribution of profits will be apportioned according to an agreed ratio. In the event of losses, both parties will share the losses on the basis of their equity participation.

Murabahah (cost plus)

Refers to the sale of goods at a price, which includes a profit margin as agreed to by both parties. Such sales contract is valid on the condition that the price, other costs and the profit margin of the seller are stated at the time of the agreement of sale.

Bai’ Bithaman Ajil (deferred payment sale)

Refers to the sale of goods on a deferred payment basis at a price, which includes a profit margin agreed to by both parties.

Bai’ al-Dayn (debt trading)

Refers to the buying and selling in the secondary markets of debt certificates, securities, trade documents and papers which are Shariah compliance. Only documents evidencing real debts arising from bona fide merchant transactions can be traded.

Bai’ al-Inah (sell and buy back)

It refers to a contract which involves sell and buy back transactions of an asset by a seller to the customer. The seller will sell the asset on cash basis but the customer will buy back the asset on deferred payment at a price higher than the cash price.

Ijarah Thumma al-Bai’ (leasing and subsequently purchase)

Refers to an Ijarah (leasing/renting) contract to be followed by Bai' (purchase) contract. Under the first contract, the hirer leases the goods from the owner at an agreed rental over a specified period. Upon expiry of the leasing period, the hirer enters into a second contract to purchase the goods from the owner at an agreed price.

Ijarah (leasing)

Refers to an arrangement under which the lessor leases equipment, building or other facilities to a client at an agreed rental fees or charges, as agreed by both parties.

Qard (interest-free loan)

A loan extended on a goodwill basis and the borrower is only required to repay the principal amount borrowed. However, he may pay an extra amount at his absolute discretion, as a token of appreciation.

Bai’ Salam (future delivery)

Refers to an agreement whereby payment is made in advance for delivery of specified goods in the future.

Bai’ Istijrar (supply contract)

Refers to an agreement between the client and the supplier, whereby the supplier agrees to supply a particular product on an on going basis, for example monthly, at an agreed price and on the basis of an agreed mode of payment.

Kafalah (guarantee)

Refers to a contract of guarantee by the contracting party or any third party to guarantee the performance of the contract terms by contracting parties.

Rahnu (collateralised borrowing)

Refers to an arrangement whereby a valuable asset is placed as collateral for debt or right of claim. The collateral may be disposed in the event of default.

Wakalah (nominating another person to act)

Refers to a situation, where a person nominates another person to act on his behalf.

Hiwalah (remittance)

Refers to a transfer of funds/debt from the depositor's/debtor's account to the receiver's/ creditor's account whereby a commission may be charged for such service.

Sarf (foreign exchange)

Refers to the buying and selling of foreign currencies.

Ujr (fee)

Refers to commissions or fees charged for services.

Hibah (gift)

Refers to gifts award voluntarily in return for any transactions given or provided.