Function of General Council of Islamic banking and Financial Institution.

The function of the council is to ensure the establishment of the Islamic banking system and financial institution. It is because the Islamic banking system and services has a great demand in the global market including South Asia, Middle East, Europe and many more. The demand of the Islamic financial system has increase greatly since the global economy crisis happen in year 2008, the subprime crisis that effect whole global economy system. The conventional banking systems become unstable due to the unstable interest rate and other eternal factor. According to the General council for Islamic Banks and Financial Institutions (CIBAFI) database, the global Islamic Financial Services Industry IFSI includes 284 Islamic Financial Institutions IFIs operating in 38 countries, both Muslim and non-Muslim, around the world and boasts total assets of around US$ 178.5 billion. The forecasted growth in assets to exceed 0.5 trillion US$ by the coming 10 years, the global positive response, especially in Europe, the growth of the emerging markets with Muslim communities, and the accelerated expansion and growth of the e-markets are some of the opportunities for the IFSI. With the strategic plan and the great demand, the Islamic banking can compete with conventional banking system.

The council also provides the advice and assistance to the members regarding to the Islamic banking system and services. The council will give an advice to the members that want to introduce the Islamic financial system in their country, they will assist the members to practice the Islamic financial system with the right way according to the sharia concept base form Al Quran and Al Sunnah, and so the profit will become Halal and free form haram sources. They also help to set up the plan such as operation, marketing, financial, and others. They also give some advice and guidance to the members about the investment, manage the portfolio, mean where to invest the money in the halal sector and industry such as real estate, financial instrument, including money market and capital market, and other types of investment, they also help the members to manage the risk, so the risk can be reduce and profit can be increase. They also give an advice to practice the Islamic economy in the country and how to implement the sharia concept in the economy practice.

The council also set the rules and regulation to the Islamic bank and financial institution to be followed by the members. All the rules and regulation are base form Al-quran and Al-sunnah and it is up to the members whether to implement or not. There is to types of Islamic finance in the world that is sharia based and sharia compliance. The difference between these two systems is the sharia based is more straight and tight regulation but the sharia compliance is according to the consideration and after been approved by the Islamic scholar just like in Malaysia practice. For an example, the council set the rate of zakat to be given and set up the takaful rules and regulation such as deposit, annual fees, conditions of registration, cancellation of registration, effects of cancellation of registration and others. They also set the term to be used in Islamic banking such the difference between istisnaa, ijarah, and salam.

The council also makes some R&D, research and development to improve the quality of the product and services. According to the CIBAFI, there are 13 researches Center and Information around the world such as Islamic Business Researcher Center in India, La Riba in Egypt, and that is including Islamic Banking and Financial Institution in Malaysia. There are also University and Institutes that make some research regarding the Islamic banking and finance to improve the efficiency and effectiveness of the services and products. According to the CIBAFI, there is 5 scientists and thinker that make the research about Islamic finance that is Dr. Monzer Kahf, Dr. Abdul Sattar, Dr. Muhammed Ali, Dr. Muhammad Umer and Dr. Muhammad Al- Bltagi. They all have many experiences, expertise and others ability to ensure the Islamic product can compete with conventional products. Without R&D, Islamic banking and finance cannot compete with conventional and they also make some formula to distribute the profit based on ratio of the capital that has been practices in many banks that practices the Islamic finance around the world. The council also has a responsibility to solve the new and critical issues regarding the Islamic financial. If there is any problems or vague about the halal and haram issues, they will make a meeting and discuss that with Islamic financial expert and Islamic scholar. They will decide the Fatwa in the meeting. However, before they make any conclusion they will make some research based on Al-quran and Al sunnah before make a conclusion. For an example, if people complain about the financial instrument such as sukuk has a haram sources, they will investigate the issues and make a conclusion after meeting.