UAE Central Bank Higher Sharia Authority holds 5th meeting for 2019

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ABU DHABI

The UAE Central Bank’s Higher Sharia Authority, HSA, for financial and banking activities in the UAE recently held its fifth meeting for the year.

The meeting was headed by His Eminence Sheikh Dr. Ahmed bin Abdulaziz Al Haddad, the Chairman of the HSA, and attended by HSA members, Their Eminences, Sheikh Prof. Dr. Jasim Ali Al Shamsi, Sheikh Esam Muhamad Ishaq, Sheikh Dr. Aznan Hasan, and Sheikh Dr. Osaid Muhammad Adeeb Al Kailani.

The HSA was updated on the preliminary draft of the Sharia standard for ‘Murabaha’. The draft was prepared by a task force established in collaboration with the UAE Banking Federation, UBF. The HSA board hailed the collaboration with UBF and expressed its utmost gratitude to the efforts made by members of the working group.

Islamic financing describes Murabaha, also referred to as cost-plus financing, as a financing structure in which the seller provides the cost and profit margin of an asset. It is not an interest-bearing loan, and is an acceptable form of credit sale under Sharia law.

The Authority also approved a proposal to initiate work on developing the Sharia standard regarding ‘Ijara’ that will take into consideration the specifications of products and services of the local market. The HSA advised that the development of these standards should involve representatives of the Industry to ascertain easy implementation.

Islamic finance jurisprudence defines Ijara an exchange transaction in which a known benefit arising from a specified asset is made available in return for a payment, but where ownership of the asset itself is not transferred, with the contract essentially designed like that of an instalment leasing agreement.

The HSA also directed to organise annual consultative meeting with representatives of Internal Sharia Supervision Committees, ISSC, of Islamic financial institutions, in the third quarter of 2019. HSA members noted the importance of such consultations and referred to the success of the inaugural meeting that was held in 2018.

They also reviewed the requests submitted by some Islamic Financial Institutions concerning the appointment and renewal of members/memberships for their Internal Sharia Supervision Committees, product approval requests and related inquiries.

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