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The IFSB Publishes Frequently Asked Questions (FAQs) for Standards on Corporate Governance (IFSB-3), Governance for Islamic Collective Investment Schemes (IFSB-6), Risk Management for Takāful Undertakings (IFBS-14) and Financial inclusion (TN-3)

Date posted: 23 November 2020

23 November 2020, Kuala Lumpur, Malaysia – The IFSB is releasing its third set of Frequently Asked Questions (FAQs) on four of its Standards, namely, Guiding Principles on Corporate Governance for Institutions Offering Only Islamic Financial Services (IIFS) (IFSB-3); Guiding Principles on Governance for Islamic Collective Investment Schemes (ICIS)” (IFSB-6); Standard On Risk Management for Takāful Undertakings (IFSB-14); and Technical Note on Financial Inclusion and Islamic Finance (TN-3) today. These FAQs are aimed at enhancing the implementation of the four IFSB standards among the member jurisdictions through presenting clarifications and explanative directions on the issued Standards. 

The Secretary-General of the IFSB, Dr. Bello Lawal Danbatta commented on the significance of the IFSB’s implementation initiatives via FAQs publication, “The IFSB has always promoted consistency when it comes to membership support. The current situation of COVID-19 have further necessitated a great need for alternative approaches to business processes.” Dr. Bello continued, “The IFSB thus leverages on technological solutions through easily accessible implementation tools to help build a proper understanding and application of issued IFSB standards and technical notes.”

FAQs for IFSB-3 gives explanations, among other things, of main principles on establishing a comprehensive governance policy framework for IIFS, provides insights on best practices for the governance committee in the IIFS and managing investment account holders. It also offers recommendation on obtaining rulings from Sharī`ah scholars and dealing with different Sharī`ah opinions. 

The FAQ responses for IFSB-6 provide guidance on what ICIS are. It also expounds on whether Sukūk may be considered as ICIS in addition to following up with the scope of ICIS governance and main guiding principles.  

IFSB-14 covers the risk management for Islamic insurance, and FAQs for this standard are developed to address the risks specific to Takāful and Sharī`ah specificities in risk managements process for takāful undertakings, as well as the key elements of the supervisory review process are also covered. 

The fourth standard, TN-3, is a relatively new IFSB standard. a technical note that provides a comprehensive view on financial inclusion from Islamic finance perspective.  In order to assist in understanding good practices in regulating the financial sector to enhance financial inclusion through Islamic finance, FAQ for TN-3 gives explanatory notes to definition of financial inclusion on Islamic finance, its specificities, its compliance with regulatory requirements and some contemporary challenges.

The second set of FAQs were published on 30 December 2019 for these Standards; Disclosure Requirements for Islamic Capital Market (ICM) Products (IFSB-19), Key Elements in the Supervisory Review Process of Takâful/Retakâful Undertakings (IFSB-20), Core Principles for Islamic Finance Regulation [Islamic Capital Market Segment] (IFSB-21); and Revised Standard on Disclosures to Promote Transparency and Market Discipline for IIFS [Banking Segment] (IFSB-22). 

The IFSB welcomes enquires, suggestions and comments for improvement of the FAQs. Comments and suggestions can be sent to ifsb_sec@ifsb.org. These FAQs are available on the IFSB website under the ‘Standards Development’ section for download.