Kuwait’s parliament has approved a proposed draft law to establish a Shariah board to regulate the country’s banking and Islamic finance sectors, a local media report said.
All 36 MPs in the Kuwait parliament have voted unanimously in favour of the draft Shariah board law. A memo attached to the law said: “In order for the banking industry to flourish, there needs to be a legal inspection body that operates independently to ensure that Kuwaiti banks abide by the Islamic legal and moral code known as ‘Shariah’.”
Kuwait central bank is expected to oversee the banking sector after the draft law is enforced. It will ensure that the country’s banking sector abides by the Islamic law.
The law is proposed for the establishment of an independent inspection committee. The central bank will be responsible for forming the new Shariah board and defining operational guidelines, media reports said. Previously, the role was taken over by the Ministry of Awqaf and Islamic Affairs committed to spreading Islamic culture in the country. It is an executive branch of the government of Kuwait.
Kuwait demonstrates a strong economy comprising nearly 70 percent of expatriates. Its banking sector remains attractive to several foreign establishments.
The proposed change in the country’s banking sector will ensure that all Islamic banking-related activities are performed as per Islamic standards. It is reported that the change will have little impact on the performance of established services. However, the strategy behind the development of any new products and services will be verified.