New era in Islamic finance industry
24 January 2023
Dr. Muhammad Tazammol Hoque and Mohammad Abdul Hannan :
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), based in Bahrain, was founded in 1991 and plays an important role in the development and issuance of standards for the global Islamic finance industry. The international organization has issued a total of 100 standards for international Islamic finance in the areas of Shari'ah, accounting, auditing, ethics, and governance. It has institutional members from over 45 countries, including central banks and regulatory authorities, financial institutions, accounting and auditing firms, and legal firms. Its standards are now followed by all of the world's leading Islamic financial institutions, and it has brought about a progressive level of harmonization of international Islamic finance practices.
As part of its commitment to educating professionals in Islamic finance, AAOIFI offers three fellowship programs: Certified Shari'ah Advisor and Auditor (CSAA), Certified Islamic Professional Accountant (CIPA), and Certificate of Proficiency in Financial Accounting Standards (CPFAS) (CPFAS). CSAA and CIPA are two of the most popular programs in the world. There have been over 300 CSAAs and CIPAs in Bangladesh as of December 2022, and these fellows have formed a forum called the Bangladeshi AAIOFI Fellows Forum (BAFF). BAFF will hold its third conference, titled BAFF-Ababil Islamic Finance Conference 2023, on February 4, 2023 at the Bangladesh Institute of Bank Management (BIBM).
BAFF members can contribute to Islamic finance in Bangladesh by providing expert guidance on the application of Shariah principles to financial products and services in a variety of ways by learning from Certified Shariah Advisors and Auditors (CSAA) and CIPA studies and attending various workshops, seminars, and conferences online and offline:
Education and awareness: Fellows can play an important role in educating the public about Islamic finance and its principles. They can hold seminars, workshops, and other events to raise awareness about the benefits of this type of finance and how it differs from traditional finance. They can also educate Islamic finance professionals working in various financial institutions on shahriah consciousness in developing products and implementing and executing them in real-life transactions.
Product development: BAFF fellows can play an important role in developing a knowledge-based Islamic finance industry in Bangladesh that will go a long way toward true shahriah compliance. By completing the AAOIFI fellowship program and gaining knowledge and skills in sharia-compliant financial products and services, fellows will be better prepared to innovate need-based Shahriah complaint products, as well as provide effective services and advice to clients in the Islamic finance industry.
Human Resource Development: Fellows can help to develop human resources for Islamic finance in Bangladesh by training and educating other professionals and students. They can share their knowledge and skills with others, thereby contributing to the development of a pool of skilled professionals capable of providing effective services and advice to clients in the Islamic finance industry.
Research and development: CSAAs and CIPAs can conduct research and development to better understand Islamic finance and its potential in Bangladesh. They can also collaborate with other organizations and experts to create new products and services that adhere to Islamic finance principles.
Providing expert advice on regulations and policies: Fellows can provide expert advice to government authorities and regulators on the development and implementation of Islamic finance policies and regulations in Bangladesh. They can contribute to the creation of a legal and regulatory framework that promotes the growth and development of Islamic finance in the country.
Auditing and oversight: CSAAs can provide independent oversight and assurance to Islamic financial institutions in Bangladesh to ensure that Shariah principles and regulations are followed. They are capable of conducting audits and issuing certifications for Islamic financial products and services.
Independent advocacy and consultancy: Fellows can promote the benefits of Islamic finance to policymakers, regulators, and other stakeholders in order to advocate for its growth and development in Bangladesh. They can also collaborate with Islamic financial institutions and other experts to create policies, products, guidelines, and legal documents that are both Shariah-compliant and international in nature.
Spread of Islamic finance education: Bangladesh has a large number of lawyers, auditors, and risk professionals, regulators, NGO processionals, Accountants, university teachers, and religious scholars. The fellows, through their professional and personal networks, can encourage these professionals from various other industries to learn about Islamic finance, as onboarding them positively is critical to the full-fledged flourishing of Islamic finance in Bangladesh.
In terms of knowledge, Islamic finance professionals in Bangladesh lag behind those in other countries in the region with a more established Islamic finance industry, such as Malaysia and the UAE. One of the primary reasons for this is a lack of formal education and training opportunities in Islamic finance in Bangladesh. While there are a few universities and institutions that offer Islamic finance education and training programmes, the curriculum and quality of these programmes may not be on par with those offered in other countries. Islamic finance professionals must continue their education in order to stay current with industry developments and to improve their knowledge and skills in sharia-compliant financial products and services.
Bangladeshi AAOIFI fellows can play an important role in developing a knowledge-based Islamic finance industry in Bangladesh, which will go a long way toward true Shariah compliance. Through their continued education and research on the development of Islamic finance around the world, they can contribute to the development of the Islamic finance industry in Bangladesh by providing insights and recommendations on how to improve the legal and regulatory framework for Islamic finance, how to develop new Islamic finance products and services, and how to promote greater awareness and understanding of Islamic finance among the general population.
We believe the fellows will attend the BAFF-Ababil Islamic Finance Conference 2023 with the missions noted above in order to establish a knowledge-based true Islamic finance industry in Bangladesh, as the Muslims of this country expect.
(Dr. Tazammol is Associate Professor, Department of Islamic Studies, Jagannath University and Abdul Hannan is Head of Islamic Finance, IDLC Finance Ltd).
