Islamic investment products require a Sharia scholar or board of scholars to function, but appointing the right Sharia scholar can be tricky as the whole area of Sharia scholarship is rather opaque.
The two companies have established a platform, Zawya Shariah Scholars, which allows Islamic financial institutions to identify and connect to over 300 Sharia scholars. The platform aims not only to bring transparency to the sector but also to address a perceived shortage of scholars.
“There are up to 20 scholars that are well known to market participants, and little knowledge of others,” says Jean Marc Paufique, general manager at Zawya. “Zawya Shariah Scholars provides an efficient means for institutions to appoint scholars that are more suited to their needs.”
Research conducted by [email protected] has shown that the 20 well-known scholars are heavily over-used, covering 54% of all positions held by the 300+ scholars. And while it may make sense for institutions to appoint a senior scholar, in many cases Sharia boards have more than one senior scholar and in some cases only senior scholars.
“This makes it all the more difficult for these institutions to find time with their scholars, who have many commitments as they strive to serve demand,” says Murat Unal, managing director of [email protected]. “Moreover, the overall industry suffers as it places a limit to the number of boards these seniors are able to benefit collectively.”
The scholarly community has welcomed the new initiative. “While scholars are a key element in Islamic Finance, and businesses depend upon scholars for their credibility, there is much about the scholarly community that is obscure,” says Sheikh Dr. Yusuf DeLorenzo, chief Sharia officer at Shariah Capital. “By providing information about scholars Zawya Shariah Scholars performs a valuable service.”
Zawya Shariah Scholars is based on data provided by [email protected]. It allows institutions to search the 300+ scholars globally, understand their affiliations and expertise, and connect to them, as well as enabling institutions to identify partnerships with others that share similar Sharia boards. Structurers of Sukuk, an Islamic alternative to bonds, are also able to view and assess Sukuk approved by scholars they specify.
Professor Dr Volker Nienhaus, member of the governing council of the International Centre for Education in Islamic Finance (INCEIF), said the platform would reduce the opaqueness of the Sharia engine of the Islamic finance industry and enhance the industry’s credibility.
Fiona Rintoul, editorial director
©2010 funds europe