Who Are the Major Stakeholders In Islamic Financial Institutions?
There are a number of key players and stakeholders in Islamic Financial Institutions:
they would be interested in protecting the value of their equity in thefinancial institution and obtain a good rate of return.
: they would be interested in guaranteeing the valued of their deposits and have ready access to their funds whenever they would like to do so.
: Murabaha contract holders with Islamic banks through whichthey supply funds while banks would invest them properly. They would be interested in protection of principal and obtain a good rate of return.
: Having legal power to monitor the daily activities of Islamic financialinstitution, they would be interested in preventing systemic problems and crises, protection of quality of financial products and efficiency of the financial system.
Financial Market Authorities
: They set minimum standards for transparency anddisclosure and would be interested in having efficient financial market.
Islamic Finance Community
: Would benefit from standardizing financial Islamic products, contracts and practices.
: would be interested in obtaining quality financial services at competitive prices.In view of the above, in order to have a good corporate governance mode, the board of directors, management as well as the auditors of an Islamic financial institution should perform their professional duties with the objectives of satisfying the needs of theshareholders and Allah as well. Corporate governance aims to enhance accountability,transparency and trustworthy. These values are crucial in Islam.
The Shari’a Supervisory Board Role in Corporate Governance
Part of the internal governance structure of the Islamic financial institution and appointed by shareholders of the institution. Its main function is to review and ensure that alltransactions, contracts, products and applications relating to the Islamic financialinstitution comply to Shari’a rules and principles with the specific fatwa, rulings andguidelines that have been issuedIn order to establish a good corporate governance framework, the Shari’a SupervisoryBoard may have to extend their jurisdiction to cover governance issues of this nature.
According to The Islamic Financial Services Board (IFSB) “there is no “single model” of corporate governance that can work well in every country; each country or even eachorganization should develop its own model that can cater for its specific needs andobjectives”.3