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Shari’ah Standards & their Effect in Promotion of Islamic Finance Industry

The Islamic finance industry in its present form was founded about four decades ago by continuous efforts and planning of the jurists and experts of the Islamic finance. In a short period, this industry could flaunt with an unexpected speed and stood strongly against the prevalent banking.
Simultaneously with the increase of Islamic financial institutions in number, several international and multi-national organizations were founded with the purpose of development of a standard regulatory framework for promotion of the Islamic finance industry. They have played an important role in empowering and organizing this industry.
Among these institutions, the role of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has been very salient, as it has gradually turned into the axis and link of Islamic banking. At the annual meeting of the Islamic Development Bank (IDB) in 1987, a plan was presented to establish an organization that would be the sole reference of Islamic financial institutions for accounting and auditing standards. Finally, in 1991, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) was registered in Bahrain.
From its inception, the AAOIFI has put on its agenda the efforts to guide and direct Islamic financial markets, financial reporting based on the principles and rules of Shari’ah as well as the development of the necessary regulations and standards for the growth of Islamic financial markets. The AAOIFI is supported by nearly 200 institutions and organizations (including central banks and regulators, legal entities, financial institutions, and accounting and auditing companies) from around 45 countries.
So far, this institution has issued nearly 100 standards, including 58 Shari’ah standards, 26 accounting standards, 5 auditing standards, two ethical charters, 8 Shari’ah regulatory standards, and a guidance charter. The Shari’ah standards are published in one book and the rest of the standards and the charter are published separately in another book, and both collections are available in Arabic and English. The book of “Shari’ah Standards” has also been translated into Urdu, Turkish, Russian and French.
Shari’ah standards are in fact a new formulation of the standards of transaction jurisprudence in the style of contemporary laws with a new language and in the form of legal clauses.
It is worth mentioning that the chairman of the Shari’ah Council of the AAOIFI, since its establishment, has been the famous contemporary jurist Allāmah Mūfti Mohammad Taqi Othmāni.
Standardization of contracts played a major role in the global expansion of the Islamic banking products. Also, the development of “Shari’ah standards” as a reference law in the field of the jurisprudence of financial transactions helped in strengthening the international position of the Islamic finance industry.
Undoubtedly, the formulation of these standards and Shari’ah norms is the most valuable fruit of contemporary group ijtihād in the jurisprudence of financial transactions. This effort revealed the position and importance of group ijtihād and the correct application of conflation jurisprudence and the great capacity of the jurisprudential heritage of Islam in interaction with the developments and challenges of the modern era; it proved that the only form of ijtihād that can be successful and universally accepted is partial specialized group ijtihād.