This development process of Shariah-compliant products should be comprehensive and sufficient to reduce the possibilities of the committee rejecting the products due to non-compliance with the Shariah principles and rulesas a result of improper structuring of products, lack of insufficient internal research in understanding the Shariah concepts, or misrepresentation of the product at the issuance or marketing stage. In this regard, the bank shall comply with the following:
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| 1. | All Shariah issues related to the product development, design, and process must be referred to the committee. The request for an advice or a decision must be detailed for effective deliberation by the committee. This will include explaining the process involved, documents used, and other necessary information.
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| 2. | The committee approval shall be obtained for all Islamic banking products to be presented and for any subsequent amendments. The committee shall make detailed review of legal contracts and other documents related to the products and transactions.
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| 3. | Product development includes both pre-product approval (i.e. the process of product structuring and developing prior to introduction to the market) and post-product approval process (i.e. the process after the product has been offered to the customers and transactions have been carried out) as follows:
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| | a) | Pre-product Approval:
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| | | 1) | Pre-product approval process involves the issuance of Shariah decisions, product structuring or design of processes backed by comprehensive Shariah research, and review of contracts and agreements before the product is offered to customers.
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| | | 2) | The pre-product approval process shall include, among other things, a review of the concept, structure, terms and conditions, documentations, policies and procedures, pamphlets, brochures and advertising materials. These documents shall be approved by the committee.
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| | b) | Post-product Approval:
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| | | 1) | Shariah governance shall include the post-product approval process which involves Shariah compliance and internal audit.
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| | | 2) | Areas of potential Shariah non-compliance risks shall be identified, and appropriate relevant actions shall be proposed to the management.
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