International Shari'ah Research Academy for Islamic Finance (ISRA)

Inconsistency in Shari'ah interpretation is one of the most pressing concerns in the Islamic financial industry. Many parties have called for serious efforts to solve it, and some have suggested applying standardization. In light of that, we have conducted a comparative study between fatwas issued by Shari'ah boards of the two main arenas of Islamic finance today, namely Malaysia and the GCC countries, in order to determine the magnitude of the inconsistencies. Malaysia is represented by the Shari'ah Advisory Council of Bank Negara Malaysia (SAC BNM) while the GCC countries are represented by five fatwa-issuing bodies: 1) Dallah al-Barakah Bank (DAB), 2) Kuwait Finance House (KFH), 3) the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), 4) Majma' al-Fiqh al-Islami (MF) and 5) Dubai Islamic Bank (DIB). This study is limited to a comparison of resolutions issued by Malaysia’s SAC BNM with those issued by the abovementioned organizations with reference to twelve Islamic principles applied in banking. The study begins with a brief explanation of the Shari'ah perspective on fatwa and divergence of opinion and then focuses on the applied comparison methods as well as the findings of the research. It was found that a true understanding of the peculiar nature of fatwa and differences of opinion of scholars demonstrates that inconsistency is common and natural. The most important finding of the study is that the fatwas of both regions have more similarities than differences and that a clear difference is only evident in relation to certain Islamic principles. Nevertheless, most resolutions did not provide the Shari'ah justifications that are necessary to nurture mutual respect.