THE SHARI'AA BOARD IN AN RF (ISLAMIC) BANK OR FINANCE COMPANY
Despite the fact that the first formal Islamic bank was started in Dubai by Sheikh Saeed bin Lutah in the mid-1970s, there was no record of a formal effort to institutionalize the process of developing a formal body that would research and develop the RF banking and finance legal code according to the law (Shari'aa). Later, three leading financial institutions were started in a formal and dedicated effort to start RF (Islamic) finance and banking. These were: (1) Dar Al-Maal Al-Islami, which was started in Geneva, Switzerland, by the son of the late King Faisal of Saudi Arabia, Prince Muhammad Al-Faisal; (2) Bayt al Tamweel Al Kuwaiti — Kuwait Finance House in Kuwait, which was organized as a shareholders' Islamic finance company headed by a Kuwaiti of Iraqi origin, Sheikh Bazee Al-Yaseen; and (3) Dallah Al Baraka Group, in Jeddah, Saudi Arabia, started by Sheikh Saleh Abdullah Kamel, a former auditor in the Department of Defense in Saudi Arabia and later an important force in the growth and development of a global RF banking movement, with vision and entrepreneurship, who was, in fact, at least 25 years ahead of his time.
They all were faced with the challenge of developing, for the first time in modern history, an RF financial legal code based on the law (Shari'aa). At that time, they resorted to the highest religious authority in the Arabicspeaking part of the Muslim world, which happened to be Al-Azhar Seminary in Cairo, Egypt.
Prince Al-Faisal appointed Sheikh Muhammad Khater, the grand mufti of Egypt (a position appointed by the president of the Republic of Egypt), to be the head of a board responsible for developing RF financial tools and methods that are compliant with the law (Shari'aa). The aim was to help with investing — according to the law — some of the vast amounts of “petrodollars” that resulted from the windfall created by the sudden increase in oil price in 1973.
Sheikh Bazee Al-Yaseen chose Sheikh Muhammad Badr Abdel Basset to be his chief scholar in the law. He was an accomplished scholar from the faculty of Daar-Ul Uloom, the House of Knowledge, at Ain Shams University in Egypt, a prestigious college that graduates many high-caliber and recognized leaders of thought and research in the law (Shari'aa) in the Arab and Muslim world. Many of this college's graduates became effective and prominent imams and fuquahaa. Sheikh Abdel Basset helped in the development of the foundation of different RF finance models for use by the Kuwait Finance House.
Sheikh Saleh Kamel appointed a group of the highest religious authorities in many countries to develop an RF financing code based on the law. The group, which was later called — for the first time in modern history — the Shari'aa Board, was given the mandate to develop RF banking products and services that paralleled those available in the riba-based banking and financial services in the West. He appointed significant scholars from Egypt, Jordan, Syria, Sudan, and Saudi Arabia, and later from Malaysia, Pakistan, and India to develop further RF banking and finance models and products and services. He also organized annual seminars and symposia among these scholars and other financial and banking experts to discuss and analyze different riba-based banking products and services available in the West and to develop ways and means to make them compliant with the law (Shari'aa). He was very generous in his investments in the field of new scholarly research in this field. He started a pioneering library of Islamic banking and finance in Jordan, and departments of Islamic banking and finance at the University in Jeddah and at Al-Azhar University in Cairo. In his efforts to develop Islamic banking and finance internationally, he opened a finance company in London and started A1 Baraka Bank in London in the mid-1980s. He and his associates at Dallah Al Baraka laid the foundation for communications between some of the top world bankers, financial experts, and business attorneys on one side and religious scholars on the other side for the first time in the modern history of Islam. Over the years, the group developed Islamic banking terminology, rules and regulations, operating standards, financing mechanisms, and products and services that comply with the law (Shari'aa) and that offer an RF alternative to the conventional riba-based ones in the fields of trade financing, auto financing, home mortgages, and business financing, as well as investing in the stock markets.