4.

2 Shari’ah Governance Framework of DB

The compliance with the Shari’ah principles is achieved by having a proper Shari’ah governance
framework. In this sense and in the aim of credibility, IF banks have established their own
Shari’ah Board (SB) usually comprised of a panel of Shari’ah scholars. The Shari’ah
governance which refers to all the elements about the active role of SB and compliance with
Shari’ah is strongly fundamental for IFB. The compliance with the Shari’ah and the
implementation of Shari’ah governance is encouraged by international institutions of regulation
like Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) and
Islamic Financial Services Board (IFSB).

There is no ultimate authority for Shari’ah compliance. Each Islamic bank’s/Interest free
banking’s adherence to the principles of Shari’ah law is governed by its own Shari’ah board.
This is a body within an Islamic financial institution that has the responsibility for ensuring that
all products and services offered by that institution are compliant with the principles of Shari’ah
law.

The Shari’ah board in Dashen bank is called ‘Shari’ah Advisory Committee’. The bank
established a Shari’ah committee or board with relevant qualification to observe the activity of
the Islamic banking and its compliance with the Shari’ah law.

A sound and robust Shari’ah governance framework is reflected by effective and responsible
Board of Directors and Management, an Independent Shari’ah Advisory/Supervisory Body that
is both competent and accountable, supported by a strong internal Shari’ah advisory capacity,
and monitored through active Shari’ah review, Shari’ah audit and Shari’ah risk management
processes. Hence, DB, in order to ensure that all IFB operations and business activities are in
accordance with Shari’ah, the bank has designed a Shari’ah governance structure that outlines
the functions relating to:
- Shari’ah review,
- Shari’ah audit,
- Shari’ah risk management and
- Shari’ah advisory.