Sharia Group

Growing importance of Islamic finance

Demand for Sharia-compliant products remained resilient as Islamic financial markets continued to expand in 2021, with the industry achieving an annual growth of more than 10% during the year under review. Total Sharia-compliant financing across the Kingdom surpassed SAR 1,600 Bn., with SAR 3,000 Bn. Islamic financial services assets of KSA representing close to 30% of total Islamic financial assets globally.

Al Rajhi’s Founding Principles

In its founding contract inked more than 30 years ago, Al Rajhi Bank committed that its dealings shall be compliant with the provisions of Islamic Sharia. In order for the Bank to achieve this commitment in all its business activities inside and outside the Kingdom, it assigned the determination of the legality of its dealings to an independent Sharia Board, which includes in its membership a number of distinguished scholars. In line with the BOTF strategy rolled out during the year under review, the Sharia Group continued to ensure that the Bank serves its stakeholders in full compliance with Sharia law.

The Sharia Board held meetings periodically, evaluating products, investment and financing agreements, contracts and models. During the year 2021, the Sharia Board held 31 meetings, examining 270 topics including new banking products, agreements, contracts, forms and inquiries. The Sharia Board issued its decision or directive for adoption and implementation across the Bank.

Structure of the Sharia Group

The Sharia Group was established within the Bank to support the Sharia Board in achieving its objectives, and to coordinate between the requirements of the Sharia Board and Bank. The Sharia Group consists of two departments:

  1. Sharia Board Secretariat Department:
    The Department comprises Sharia advisors who study and carry out relevant Sharia research on new banking products, agreements and contracts put forward by various groups and departments of the Bank. Their findings are presented to the Sharia Board, which issues its directions and decisions then communicates the same through the Secretariat Department to relevant groups and departments. The Department participates in developing Sharia products and provides Sharia advice to the Bank in accordance with the decisions of the Sharia Board. It is also the Secretariat Department’s responsibility to record, classify, index and facilitate the minutes of all Sharia Board meetings.
  2. Sharia Supervision Department:
    The supervision of all Bank operations and activities in relation to the implementation of the Bank-related decisions and directives of the Sharia Board falls under the Supervision Department’s purview. This ensures the Bank introduces no unauthorised products, contracts or models to customers. The Department comprises an integrated team of Sharia observers who perform Sharia audits on the Bank’s business through automated systems and field visits, and is responsible for developing and reviewing auditing standards issued by the Sharia Board. During the year under review, the Department audited more than fifty banking branches via field visits.

Activities and works of Sharia Group in 2021

The Sharia Group continued to raise Sharia awareness among the Bank’s employees, customers and those interested in Islamic banking during the year, including, but not limited to:

  1. 7 awareness workshops on executing phone financing for chosen retail banking products
  2. 4 courses in Islamic banking for new employees and participants in the Future Leaders Training Programme
  3. 300 telephone inquiries and 40 mail inquiries answered
  4. 10 awareness messages about the Sharia controls of products and services and the Sharia policy of the Bank communicated to employees
  5. Prepared, printed and distributed a number of distinguished publications; mostly Doctoral Dissertations and Masters Theses authored by experts in the Islamic banking and financial field.
  6. Represented the bank in 2 Shariah Committee meetings with the Saudi Central Bank
  7. Participated in seminars and specialised Fiqh forums
  8. Provided scientific support to a number of Sharia researchers in the field of Islamic banking
  9. Trained a number of undergraduate and postgraduate students at Imam Muhammad bin Saud Islamic University

Future outlook

In 2022 and beyond, it is expected that Islamic finance will continue to expand, maintaining its now long-established growth trend. The sector is expected to continue growing on all fronts, including banking services, sukuk, takaful and insurance services, benefiting from supportive government policies, which reflect strong and increasing demand for Sharia-compliant products.