Doha, 03 December 2009 - Islamic Banking Vs Conventional Banking & the Role of Shariah Auditor” was the topic of presentation given by Mr. Musadag El Melik General Manager QNB Al Islami at the IIA seminar held recently at the Millennium Hotel in Doha.
Mr. Musadag started his presentation explaining Islamic banking to a system of banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. “The foundation of Islamic banking operations is based on the Islamic faith and is restricted to the limits of Islamic Law or the Shariah in all of its actions and deeds. Amongst the governing principles of Islamic banking are the non-existence of interest (riba), the avoidance of economic activities involving oppression (zulm), the avoidance of economic activities involving uncertainty (gharar), the avoidance of economic activities involving ambiguity (Jahala), the introduction of an Islamic tax, zakat and the discouragement of goods and services which contradict the Islamic values (haram)” Musadag quoted.
Islamic banking offers a wide range of products such as Mudarabah or profit sharing, Murabaha or cost plus, musawama (bargaining), Ijarah or lease and so on. Additionally, Mr. Musadag gave an explanation on SUKUK which is considered equivalent to the concept of bonds and a very popular Islamic financial instrument. He also emphasized that fixed income or interest bearing instruments are prohibited in Islamic banking activities.
Talking about the Islamic banking practices, Musadaq said, “The core responsibility of guiding and supervising the operations of Islamic banks rests with respectable Shariah Scholars duly appointed as the Shariah Advisors and members of Shariah Boards of these institutions. They assure integrity and credibility of institutions offering Islamic Financial Services”
Masadaq also added “The scope of Shariah Audit in the Annual Report would be to determine and confirm that the allocation of funds, weightages, profit sharing ratios, profits and charging of losses (if any) are in accordance with Shariah rules and principles. Accordingly, the Shariah Auditor must have access to all records, documents and information from all sources including professional advisors and employees in discharge of his duties. The management shall be responsible to provide him all information relating to the IFS compliance with Shariah”
The seminar was hosted by the Qatar Chapter of the Institute of Internal Auditors in association with the Scientific Accounting Association (Qatar University) and was sponsored by QNB Al Islami. The event was attended by more than 120 members including Mr. Girish Jain, Seminar chair who welcomed the audience and Mr. Assaad Kanaan, President of the IIA, who introduced the speaker.