Islamic Financial Services Board (IFSB)
What Is the Islamic Financial Services Board (IFSB)?
The Islamic Financial Services Board (IFSB) is an international standard-setting organization that advances the sufficiency and stability of Islamic banking by giving global prudential standards and core values in the areas of capital adequacy, corporate governance, risk management, and transparency, among others.
Understanding the Islamic Financial Services Board (IFSB)
The Islamic Financial Services Board (IFSB) is situated in Kuala Lumpur, Malaysia, and started operations in mid 2003. It was founded by a consortium of central banks and the Islamic Development Bank, determined to advance the awareness of issues that could affect the Islamic financial services industry. It issues Sharia- agreeable standards, holds meetings and workshops, and gives guidance and supervision, among different drives.
While IFSB standards are primarily worried about the identification, management, and disclosure of risk connected with Islamic financial products, another Islamic financial standards organ, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), sets best practices for taking care of the financial reporting requirements of Islamic financial institutions.
The ISFB comprises of:
- The overall assembly, which incorporates all members of the ISFB
- The council, which acts as the strategy making body of the IFSB and incorporates the senior executive of each full member of the organization
- The executive committee that exhorts the council on operational and administrative issues
- The technical committee, which exhorts the council on issues and comprises of up to 30 people delegated by the council
- The working group, which drafts standards and rules and reports to the technical committee
- The task force that oversees specially appointed activities.
- The Arabic Editing committee that interprets ISFB archives from Arabic into English
- The secretariat, which acts as the permanent administrative body and is going by a secretary-general selected by the council
Islamic Financial Services Board (IFSB) Membership
As of December 2020, the IFSB had 188 members, which comprises of 80 regulatory and supervisory specialists, 10 international between legislative organizations, and 98 market players that comprise of financial institutions, professional firms, industry associations, and stock exchanges.
There are three types of memberships that an entity can apply for: full membership, associate membership, or spectator membership. Benefits to membership incorporate getting technical assistance, voting in the General Assembly, participating in studios, roundtables, classes, and gatherings, and access to occasions and gatherings.
Islamic Banking
The requirement for the Islamic Financial Services Board (IFSB) emerges from Islamic banking, which is banking and other financial services that stick to the religion of Islam. This is known as endorsing to shariah law. There are certain fundamentals to shariah law that make Islamic banking boundlessly not quite the same as the traditional approaches to banking; those that are normally associated with the west.
These differences make the requirement for a body, for example, the IFSB to carry out, update, and monitor Islamic banking standards around the globe, particularly in while Islamic banking, primarily from the Middle East, has become so conspicuous. Rich Islamic countries, for example, the United Arab Emirates and Qatar, conduct critical business with western countries and must comply with shariah law and this should be conveyed and agreed by with western firms also.
The fundamental perspectives in Islamic law that require consideration are the forbiddance of charging interest on borrowed money, contribution in businesses that conflict with Islamic law, like gambling and liquor, and business rehearses that are uncertain. Hence, uncertainty, and gambling so far as that is concerned, would deny any speculative trading, where the future outcome isn't known.
Islamic banking has found strategies for getting around shariah law, for instance, interest is incorporated as part of the overall price of a transaction or is conducted through equity sharing plans.
Features
- Shariah law forestalls charging interest for borrowed money as well as partaking in any speculative endeavors.
- The IFSB is a large organization body situated in Malaysia with 188 members globally, which incorporates financial institutions, stock exchanges, and industry associations.
- Islamic banking complies with shariah law, which are the principles of the religion of Islam, and is different in numerous ways from how business is conducted in the west.
- The Islamic Financial Services Board (ISFB) is an organization that sets and advances the precepts of Islamic banking by giving standards and principles.
