Corporate governance, risk management, transparency, disclosure, and internal control requirements in Islamic financial services industry should always be developed, and adjusted to meet the needs specified for Islamic banks, especially that an important part of the work of these banks is based on impression and reputation of the nature of their work. Therefore, these banks should be aware of the role entrusted to them, especially the ethical one. The nature of risks faced by Islamic banks may raise specific issues in terms of assets and inventory assessment, investment costs, regular income and recognition of losses, adequacy of guarantees and others. We must emphasize here the importance of continued development of mechanisms to cover such risks. This underlines the importance of integration into global financial markets, encouragement of competition, and provision of a proper climate for on-going innovation so that Islamic banks can consolidate their positions in all markets and boost their ability to provide products for all segments of customers. On the other hand, a controversy is sometimes raised and comparisons are made between Islamic and conventional banks in terms of risk degree, exposure to insolvency, and the argument ensuing concerning capital adequacy. However, the important point is the awareness and understanding the nature of risks, development of mechanisms to cover such risks, and the ability to compete in markets and meet the needs of customers.
All Saudi banks now provide a range of products that are compliant with Shari’a requirements and with financial engineering specifications of the highest levels under the supervision of well-reputed Shari’a committees and top class financial professionals. In the context of supporting such efforts, SAMA’s IOB has offered many programs, courses and symposia in the area of developing, marketing and supervising Shari’a compliant products. The number of bankers benefiting from those programs stood at 6,300 who participated in 374 programs during the last seven years. These endeavors have considerably helped in developing Islamic banking in Saudi Arabia without undermining compliance with Islamic Shari’a or the technical flexibility needed by an emerging and dynamic market. Dear Audience, It is very important to mention that the industry of Islamic financial services should be completely integrated into the global financial markets while maintaining at the same time its distinguished nature and unique services. The industry should also be subject to the same level of supervisory control as other financial institutions. Any breach of standards, practices or application by Islamic banks will not only be an obstacle to their services and products, but it will also serve as a hindrance to accepting their services and products by international financial markets. Consolidating a bank’s financial data with those of all its subsidiaries and branches is another principle that must be applicable to all banks, and such principle is necessary for ensuring consolidated and comprehensive supervision by the supervisory authorities in the bank’s home country.