branches total no. of branches deposits ( rs. in bn ) % age of banking industry financing. & invest. ( rs. in bn ) note : two more full - fledge islamic banks have been granted licenses, which have not started operations as yet. in addition, two more conventional banks have plans to open islamic banking branches this year. shariah compliance framework – country wise shariah committee country islamic banking law at central bank at bank level fit & proper criteria for shariah advisor / committee shariah compliance inspection approval by bnm governance through shariah committee aaoifi aaoifi shariah standards accounting standard all products approved by sac, accounting standards role of shariah developed by masb committee defined by bnm malaysia islamic banking law 1983 shariah advisory council shariah committee bahrain regulations for islamic banks shariah supervisory committee shariah supervisory board n. a internal and external shariah audit as per aaoifi standards indonesia laws for islamic banking introduced in 1992 & amended in 1999 national shariah board shariah supervisory board nsb approves appointment of ssb members internal and external shariah audit fatwa on products issued by nsb aaoifi iran usury free banking act council of guardian n. a n. a no guidelines provided by council of guardians not known no sfsb approves islamic products introduced by financial institutions not known essentials for islamic modes aaoifi standards are being adapted by a committee of icap brunei islamic banking act cap. 168 pakistan banking companies ordinance, 1962 and policies for islamic banking in 2001 & 2003 sfsb approves appointment of shariah financial shariah shariah supervisory board advisory board advisory board ( sfsb ) members shariah board shariah advisor manual developed fit & proper in 2004, now being criteria by sbp implemented

in understanding the islamic financial transactions. another importance aspect is the person ’ s qualifications and experience in issuing fatwas relating to financial transactions. the fit and proper criterion determined by sbp allows for inclusion of all school of thoughts and also includes scholars that have experience and qualification of international level. these shariah scholars are chosen by the banks, approved by sbp and appointed by the banks to over see their islamic banking operations. therefore they serve as sbp ’ s eyes and ears at the operational level of islamic banking operations in the country. the second element is shariah compliance inspection. the inspection manual, which is very comprehensive, was compiled by ernst & young out of bahrain in collaboration with their affiliate in pakistan. the shariah compliance inspection is needed to ensure that specific terms of islamic contracts, fatwa on the transaction, as well as the sequence of execution of the agreement are accounting and auditing organization for islamic financial institutions, headquartered in bahrain. its shariah board consists of 14 shariah scholars across the world. table is attached as annexure conducted according to shariah principles. we are in the initial stages of rolling out islamic accounting based on aaoifi standards and the inspection is geared towards auditing the transactions according to these standards. next year in addition to the normal sbp inspection, all banks conducting islamic banking will also have to undergo the shariah compliance inspection. the third element of our shariah compliance supervision is the all important shariah board. we have instituted a shariah board 4 at sbp. one of the unique features of the shariah board is the composition of its membership ; because the board includes not only shariah scholars, but also a chartered accountant, lawyer, and central banker. we believe that shariah is the pivot around which islamic banking revolves but in addition there are other disciplines that are critical to the success of executing the shariah standards. as such we believe that all such critical disciplines must be represented within the shariah board so that the rulings emerging out of the shariah board are not only 100 % shariah compliant but these are also compatible with the legal and financial infrastructure available to the islamic banks. the board is responsible to give ruling on any conflicts arising out of the shariah compliance inspection. it is responsible to provide guidelines to sbp for shariah aspects of regulations. it helps in product development and provides support for approving any new products developed