One of my passions is teaching and I thoroughly enjoy conducting training and sharing my knowledge of Islamic finance during my free time as I strongly feel that it is an area which is often for some reason or another, neglected within Muslim communities.
In this particular post, I will discuss why, in my opinion, it is important for all staff working in Islamic financial institutions (IFIs) to take an introductory course in Islamic finance so that they can learn the basic fundamentals of Islamic finance. This shouldn’t only be applied to large IFIs but rather any institution that is Shariah compliant.
The reason that I feel that this is important, is that from my experience, the vast majority of staff who join IFIs usually come from a conventional financial institution or from a conventional finance background. Due to this, in most cases, their knowledge of Islamic finance & Shariah is very limited or completely absent. Hence, I feel that it is imperative that they take an introductory course on Islamic finance as them not doing so may lead to the following risks:
A) Reputational Risk: There could possibly be a reputational risk for the IFI as if their staff do not have the necessary knowledge about the IFIs products & processes, they could end up explaining the products incorrectly to customers thereby causing a reputational risk for the IFI.
B) Risk of Profit Forfeiture: Most of the products offered by IFIs need to follow a particular transactional flow according to the Shariah structure approved by the IFI’s Shariah board. If the staff of any IFI do not understand the importance of the transactional flow and the approved steps are not followed correctly, it may cause a Shariah compliance issue which would be identified during a Shariah audit. This could possibly lead to profit forfeiture and a loss of income for the IFI.
After discussing a couple of the main reasons for why it is important for all staff working in IFIs to take an introductory course in Islamic finance, we will now look at some of the reasons as to why such training is not mandatory in some IFIs:
A) Lack of Shariah Resources: The Shariah advisor/department do not have the time or manpower to conduct training on an ongoing basis. This can be solved by conducting the proposed training outside of office hours with remuneration being given to the Shariah trainers. Another solution is to externally source a qualified Shariah trainer to conduct the training in collaboration with the IFIs Shariah advisor/department. Both these solutions have been implemented at some IFIs within the GCC.
B) Lack of Time (Attendees): A lot of staff in an IFI perform critical functions and therefore it is not easy for them to obtain permission from their managers to attend any training even if it is for a few hours. This can be possibly solved by developing interactive Shariah E-training which can be taken at their desks. Alhamdulillah, I was blessed to manage such a project for the Shariah department of a major IFI in the GCC. I will discuss my experience working on this and the challenges faced in a future post insha Allah.
A final question to ask is when and how often Islamic finance training should be given to staff? From my experience each IFI has a different way of approaching this, with some making such training compulsory during the orientation period or probation period while others make it compulsory during the 1st year of employment. Furthermore, some IFIs have refresher courses on a yearly basis as well as more customised courses to suit business needs.
There is no one size approach and each IFI should discuss the matter with their Shariah advisor/department to come up with the optimal solution.