Chapter 21 Strengths, Gaps and Issues in Shari’ah Governance Framework 2015 for IBIs in Pakistan

Abstract

Shari'ah governance is a major part of governance of Islamic banking institutions (IBIs). Pakistan is the country where pioneering work on Islamic banking and finance has been conducted since 1970s. Major changes were made in 2002 and then in 2015 in the Islamic banking governance framework. This chapter critically analyses as to what extent the ‘shari'ah governance framework’ (SGF) introduced by the State Bank of Pakistan (SBP) in 2015 could be able to ensure compliance of Islamic banks' practices with the principles of shari'ah. The SBP, the regulator of banking system, has been doing its intensive efforts to ensure shari'ah compliance, and as such the SGF introduced by it is a good ‘case study’ on the subject. By applying the descriptive and analytical methodology, it examines the strengths and weaknesses and suggests how the gaps could be filled to make the SGF really effective for achieving the objective.