Alhamdullilah during my time in the Islamic finance industry I’ve been blessed with the opportunity to conduct multiple Shariah Training sessions to both IFI staff and university students, as well establish an Electronic Shariah Training Module for one of the oldest and largest Islamic banks in the world.
Shariah Training is crucial as the majority of staff hired by IFIs join from conventional financial institutions. While previously IFIs differed vastly in terms of the level of importance given to Shariah Training, due to new Shariah Governance regulations, it is now being implemented much more thoroughly with both general and specialised Sharia Training being conducted. This is very important as if there is not an adequate level of Shariah Training of staff in IFIs it can cause a number of issues such as those listed below:
๐ก๐ญ) ๐ฅ๐ฒ๐ฝ๐๐๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น ๐ฅ๐ถ๐๐ธ:ย There is a reputational risk for the IFI as if their staff do not have the necessary Shariah knowledge about the IFIs products & processes, they end up explaining the products incorrectly to customers or using conventional terminology when marketing products, thereby causing a reputational risk for the IFI. The reputational risk is worse when it is a senior figure of the IFI dealing with external stakeholders.
๐ก๐ฎ) ๐ฅ๐ถ๐๐ธ ๐ผ๐ณ ๐ฃ๐ฟ๐ผ๐ณ๐ถ๐ ๐๐ผ๐ฟ๐ณ๐ฒ๐ถ๐๐๐ฟ๐ฒ: Most of the products offered by IFIs need to follow a particular transactional flow or sequence according to the approved Shariah structure. If the staff of an IFI do not understand the importance of the transactional flow and the approved steps are not followed correctly, it causes a Shariah compliance issue which would be identified by Internal Shariah Audit. This could possibly lead to profit forfeiture and therefore a loss of income for the IFI.
๐ก๐ฏ) ๐๐ต๐ฎ๐น๐น๐ฒ๐ป๐ด๐ถ๐ป๐ด ๐ฆ๐ต๐ฎ๐ฟ๐ถ๐ฎ๐ต ๐๐ฑ๐๐ถ๐๐ผ๐ฟ๐: When staff are unaware of the Shariah requirements regarding financial transactions they are more likely to challenge the Shariah Advisors as they do not comprehend why certain transactional aspects are not acceptable from a Shariah perspective or do not understand certain Shariah comments on the transaction documentation given by the Shariah Advisors.This can cause many issues especially during live, large transactions with tight deadlines.
๐ก๐ฐ) ๐๐ฎ๐ฐ๐ธ ๐ผ๐ณ ๐ฃ๐ฟ๐ผ๐ฑ๐๐ฐ๐ ๐๐ถ๐ณ๐ณ๐ฒ๐ฟ๐ฒ๐ป๐๐ถ๐ฎ๐๐ถ๐ผ๐ป: Staff who are unaware of Shariah principles tend to not be very innovative when it comes to developing new innovative Shariah compliant products from scratch as it is easier for them to get existing conventional products adapted to meet Shariah requirements.
