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  • Shariʼah Governance Related Disclosure Requirements for the Banks Conducting Shariʼah Compliant Banking

    No: 45075579 Date(g): 23/6/2024 | Date(h): 17/12/1445Status: In-Force

    Pursuant to the powers granted to SAMA under its charter issued by Royal Decree No. (M/36) dated 11/04/1442H, and the relevant laws, and in reference to the ongoing efforts to establish a supervisory framework for banks conducting Islamic banking activities, SAMA, in its commitment to enhancing disclosure and promoting transparency in the financial sector, hereby shares the Shari’ah Governance Related Disclosure Requirements for Banks Conducting Islamic Banking Activities.

    These requirements aim to establish the minimum standards for such disclosures.

    Kindly take note and comply accordingly, effective December 31, 2024.

    • 2. Objective

      Shariʼah Governance Related Disclosure Requirements for the Banks Conducting Shariʼah Compliant Banking set out minimum disclosure requirements for banks related to Shariʼah Governance. The disclosure requirements will enhance the existing corporate governance and Shariʼah governance frameworks applicable to the banks.

    • 3. Scope of Application

      Shariʼah Governance Related Disclosure Requirements for the Banks Conducting Shariʼah Compliant Banking shall be applicable to all domestic banks licensed by SAMA under the Banking Control Law that conduct Shariʼah compliant banking activities. Banks must ensure that compliance practices by their majority owned banking subsidiary(ies) or branches conducting Shariʼah compliant banking activities outside Saudi Arabia are consistent with these minimum requirements. In case, the provision of this circular is in contradiction to that of host country's regulation, the host countryʼs regulation will apply.

    • 4. Definitions

      The following terms and phrases used in this document shall have the corresponding meanings unless otherwise stated:
       

      SAMA: The Saudi Central Bank.
      Bank:Any domestic bank that is licensed to carry out banking business in Saudi Arabia in accordance with the provisions of the Banking Control Law and that conducts Shariʼah compliant banking either as a full-fledged Islamic bank or through an Islamic Window operations.
      Shariʼah Committee:A Shariʼah Committee responsible for supervising compliance with Shariʼah principles and rules and their application at the bank.
      Shariʼah Committee Members: A group of specialists whose knowledge and experience are not limited only to the Shariʼah and related matters but also include the jurisprudence of contemporary financial transactions used to form Shariʼah decisions given to the bank. These Shariʼah decisions are usually not directed to the public or entities in other activities.
      Annual Report: Information and data published by the banks along with audited financial statements which covers activities and financial performance throughout the preceding year.


       

    • 5. Disclosure Requirements

      1.Banks are required to disclose the following in their Annual Reports: 
       a. A statement on the independence of their Shariʼah Committee members as per the requirements mentioned in Article 7 of the Shariʼah Governance Framework for Local Banks Operating in Saudi Arabia; 
       b. The Curriculum Vitae of their Shariʼah Committee members outlining their qualifications and experience; and 
       c. Any change of members of their Shariʼah Committee during the financial year. 
      2.Banks are required to disclose, on an annual basis, the Shariʼah pronouncements/ resolutions issued by their Shariʼah Committee during the previous 12-months period ending 31 December of each calendar year. At a minimum, this should include: 
       a. The name of product/service offered by the bank based on the resolutions issued by the Shariʼah Committee; and 
       b. The decisions of the Shariʼah Committee (including rationale). 

       

      In doing so, banks may assess confidentiality and competitiveness considerations when making this disclosure and limit publication to information that is or will be made public.
      The above disclosures (1&2) should be made at a minimum, electronically via the bank’s website.
       

    • 6. Effective Date

      These requirements will be effective on 31 December 2024 G.