The Sharia Group

The Sharia Group of Al Rajhi Bank is the fundamental pillar supporting the bank.

The Group is entrusted with a series of interrelated and complementary functions that collectively aim at realizing the Bank’s strategy of being a leading Islamic Bank. This objective is achieved by having in place policies which ensure that the bank conducts its business in harmony with the precepts of Islamic Sharia.

• Sharia Policy
• Objectives
• Sharia Board

Sharia Policy

Ever since its inception, Al Rajhi Bank has undertaken to implement and observe the precepts of divine Sharia and Islamic legislation in all its transactions.  To realize this objective, a Sharia Board was formed, based upon on a decision of the General Assembly, which also ratified the Board’s rules of implementation. The Board is completely independent of all other corporate divisions and departments, whose transactions and dealings are subject to the Boards' approval.  Such compliance is considered one of the most important standards of quality assurance, which is applied to all products and services rendered to Al Rajhi clients. All corporate personnel, including top management, are called upon to comply with this policy, in line with the provisions of the Bank’s articles of association and other rules and guidelines.

Implementation of Rules and Guidelines States the Following

1. Decisions of the Sharia Board are considered binding on all departments and the management of the Corporation
2. Implementation of Sharia Board decisions is the responsibility of all levels of corporate executive departments
3. No product or service can be launched until it has been approved by the Sharia Board
4. It is strictly forbidden to act in violation of any decisions of the Sharia Board
5. Any violation of a Sharia Board decision, breach of an existing practice decreed by the Sharia Board or the launching of any product or service without prior approval of the Sharia Board will incur upon the culprit the applicable penalty
6. The Sharia Board monitors the activities of the Corporation from a Sharia standpoint and follows-up the implementation of Board decisions, through the Sharia Control Department or any designated body.
7. The Sharia Board will develop a contract sin line with the precepts of Sharia, applicable to all corporate transactions and deals at both local and international levels
8. The Sharia Board will create an awareness of Islamic banking and investment through employment of the right tools
9. The Sharia Board will ensure the proper selection of company personnel, especially at the top management level, of persons who are willing to adopt its Islamic banking policy and train other company personnel in Islamic banking

The Sharia Board will endeavor to ensure the proper implementation of Sharia Board decisions and facilitate their monitoring through the publication of proper manuals and guidelines, such as the Sharia Monitoring Guide and Sharia Control Guidelines. (Sharia Board Decision # 317)

Objectives

The objective of the Sharia Group is to participate in the realization of the Bank’s Islamic banking strategy through support of the plans and policies necessary for the Bank’s compliance with the precepts of Islamic Sharia, in the conduct of its business transactions.

To achieve this objective, the Sharia Group has been entrusted with the following functions:

• Reviewing the Bank’s transactions and activities and reporting its findings to the Sharia Board for further action
• Monitoring the implementation of the Sharia Board decisions and their application to all aspects of the Bank’s business activities within the Kingdom and abroad
• Developing contracts and products in line with the precepts of Islamic Sharia
• Creating an awareness of Islamic economics inside and outside the Bank
• Developing the necessary information and communications for implementing the functions of the Sharia Group

The following divisions are present within the Sharia Group:

• Secretariat
• Sharia Control Department
• Control and Information

Sharia Board

The founders of Al Rajhi Banking and Investment Corporation mutually agreed in the memorandum of association that all company transactions and dealings should be in compliance with the precepts of Islamic Sharia.  Accordingly, the Council of Ministers Resolution No. 245 dated 26/10/1407H and Royal Decree No. M/59 dated 03/11/1407H were issued to license Al Rajhi Banking and Investment Corporation. Additionally, Ministerial Resolution No. 3198, dated 05/04/1409H, announced the incorporation of Al Rajhi Banking and Investment Corporation as a Saudi joint stock company.

Objectives of Sharia Board

In the 11th. General Assembly held on 27/11/1419H, the charter of the Sharia Board was approved.  The charter stated that the objective of the Sharia Board it to verify the compliance of the Bank with the precepts of divine Sharia in all corporate dealings, provide counsel and guidance to the Bank in a manner that will satisfy the intent of Islamic legislation.

Scope of Sharia Board

In the 11th. General Assembly held on 27/11/1419H, during which the charter of the Sharia Board was approved, it was stated that all corporate transactions and dealings should be subject to the approval and under the control of the Sharia Board, whose decisions will be binding upon the Corporation.

Sharia Board Decisions

From the date of its formation until 15/01/1429H, the Sharia Board has taken over eight hundred decisions in which it approved a variety of contracts, agreements, forms and products, treated a substantial number of issues and remarks and responded to a large number of inquiries addressed to the board by various departments and clients of the bank.

The General Assembly of the Company approved the creation of the Sharia Board and appointed its members.  It also approved its methodology.  Accordingly, it has become contingent upon the executive management of Al Rajhi Banking and Investment Corporation at all levels to endeavor to realize the objectives for which the Corporation has been incorporated, in compliance with the precepts of Islamic Sharia in all its dealings and transactions.

An Executive Committee reports to the Sharia Board. The committee consists of three members: two of them are members of the Sharia Board and the third is the General Secretary of the Sharia Board. The Sharia Board appoints one of the members of the Executive Committee as committee chairman and determines the powers and functions of this committee.

The Sharia Board has issued rules of implementation that delineate the powers and functions of the Executive Committee, the most important being: overseeing the functions of the Sharia Control Department, appointing Sharia controllers, studying issues submitted to the Sharia Board and reviewing newly-devised forms and products prior to their submission to the Sharia'a Board for approval.

The current membership of the Sharia board as determined during the 18th General Assembly held on 03/03/2007 is as follows: