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The debate on the topic of Corporate Governance (CG)
witnessed a substantial boost in the wake of the unprecedented financial
crisis of 2008, and previously, the collapses of big corporations and banks
in 1990s.The governance failure has been found as the key factor behind
this debacle. The CG in Islamic perspective got attention from the scholars
and researchers soon after the Islamic Banking Institutions (IBIs) emerged.
Nevertheless, Islamic CG faced some issues such as incompetency of the
board of directors, absence of effective risk management policies, moral
hazards, and non-compliance of Shar¯ı‘ah principles. The goal of compliance with Islamic law has also been added to the CG and the State Bank
of Pakistan (SBP), as regulator, issued a Shar¯ı‘ah Governance Framework
(SGF) in this respect. However, a separate statutory law for the governance
of IBIs is non-existent. Hence, the IBIs follow conventional regime, which
failed to cater the specific requirements of IBIs. The research adopts
qualitative inquiry method for deeper analysis. The governance of the IBIs
should be in the hands of such competent CG players, who comply with
the principles of am¯anah (trusteeship) and mas’¯ul¯ıyah (accountability) in
addition to other capabilities. There are certain provisions in the existing
CG regime, compatible with these principles, but the same do not ensure
good governance. Further, to the best of our knowledge, no CG player is
punished for non-compliance with the provisions of the SGF. We suggest
proper punitive actions for the Shar¯ı‘ah non-compliances. Various scholars
have discussed CG principles, but they did not check any legal regime to
verify the degree of compatibility of its provisions with those principles.
This study is an effort to fill the gap by assessing the compatibility of the
provisions of the existing SGF with the Islamic principles of Am¯anah and
Mas’¯ul¯ıyah with respect to IBIs in Pakistan.
Mohammad Ayaz, Mohammad Tahir Mansoori. (2017) Strengthening Corporate Governance Regime for Islamic Banks in Pakistan: Focusing on the Principles of Amana ¯ and Mas’¯ul¯ıyah, Journal of Islamic Business and Management, Volume 7, Issue 2.
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