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Annual Report 2020
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Annual Report 2020
Sharia Supervisory Board and Sharia Auditing
Sharia Supervisory board

A specialized board of Sharia scholars which is elected by the Bank's general body. Sharia supervision is a prominent and distinctive feature of the Palestine Islamic Bank’s activities controlling and developing the Bank’s business in accordance with Sharia’s provisions and ensuring that the Bank's business and activities are carried out in accordance with the principles of Islamic Sharia.

Sharia Supervisory board References
  • The decisions, directives and circulars approved and issued by it.
  • The standards of the Accounting and Auditing Organization for Islamic Financial Institutions in Bahrain.
  • Decisions, fatwas, and recommendations of seminars, councils and juristic forums are considered and approved by the Bank's Sharia Supervisory Board in relation to the Bank’s operations.
Scope of the Sharia Supervisory board

The Board has the right to fully access, without restrictions, all records, transactions and information, including those of the Bank’s employees and consultants. The board relies on the instructions of the Palestinian Monetary Authority according to banking law and sharia standards and the rules and best practices for the governance of banks in Palestine issued by the Palestinian Monetary Authority.

The decisions of the Board within its purview, and which do not contradict with the powers of the Supreme Sharia Supervisory Board founded by the Palestinian Monetary Authority, are obligatory on the Bank. In this regard, the decisions of the Board on the Bank’s transactions and activities are enforceable.

Tasks of the Sharia Supervisory Board
  • Directing, monitoring and supervising the Bank’s business and activities to ensure compliance with Islamic Sharia.
  • Ensuring that there is a sound and effective internal Shari'a supervisory system that ensures the application of Islamic Sharia.
  • Examining the Bank’s compliance with the provisions of Islamic Sharia in all its activities.
  • Providing guidance and training to the Bank's employees on compliance with Islamic Sharia.
  • Expressing opinions on the extent of the Bank’s commitment to the provisions of Islamic Sharia and publishing them before the Bank’s general assembly and in its annual report.
Tasks of the Sharia Supervisory Board
  • Directing, monitoring and supervising the Bank’s business and activities to ensure compliance with Islamic Sharia.
  • Ensuring that there is a sound and effective internal Shari'a supervisory system that ensures the application of Islamic Sharia.
  • Examining the Bank’s compliance with the provisions of Islamic Sharia in all its activities.
  • Providing guidance and training to the Bank's employees on compliance with Islamic Sharia.
  • Expressing opinions on the extent of the Bank’s commitment to the provisions of Islamic Sharia and publishing them before the Bank’s general assembly and in its annual report.

Working mechanism of the Sharia Supervisory president:

  • The Board meets at the invitation of its chairman or at the invitation of the Bank management when necessary.
  • The Board holds twelve regular meetings a year, one meeting each month.
  • The Board receives enquiries from the executive management and from the Bank’s branches through the Bank’s Sharia Auditing Department, and it duly responds to them.
Sharia Auditing

The Shari'a Auditing department is one of the Bank's important supervisory departments, and it follows the work of the Shari'a Supervisory Board appointed by the Bank’s general authority. It is independent from the executive management in performing its work and has the right to view all documents, contracts, agreements, models and policies of the Bank with full support from the Board of Directors, executive management, and the Sharia Supervisory Board in order to achieve the Bank's goals and avoid risks in accordance with the Sharia and approved governance standards.

Main objectives of the Sharia Auditing Department:
  • Verifying that the Bank’s management has fulfilled its responsibilities towards implementing the provisions and principles of Islamic Sharia in accordance with the approved Sharia standards.
  • Verifying the suitability, adequacy, and effectiveness of the internal Sharia control system.
  • Verifying that any activity, product, service, or contract carried out by the Bank is authorized by the Sharia Supervisory Board.
  • Achieving the integrative supervisory role with other supervisory departments with the aim of achieving an effective regulatory system.
Tasks of the Sharia Auditing Department
  • Reviewing the instructions and work procedures issued by the Bank’s management in light of the Sharia’s Supervisory Board decisions.
  • Preparing for the regular meetings of the Board and following up the implementation of its decisions and recommendations.
  • Carrying out field Sharia audit tours on a regular basis and submitting audit reports to the Sharia Supervisory Board.
  • Participating with the Board in scientific meetings and seminars and communicating with the public effectively.
  • Preparing the Department's business plan annually, revising work instructions and procedures and seeking approval of them by the Sharia Supervisory Board, which in turn evaluates the performance of the Department and its employees within the approved annual plan.
Sharia Supervisory Board Members
Dr. Ali Al Sartawi
Head of the Shari'a Supervisory Board

Holds a doctorate from the University of Jordan with a comparative study on the principle of legality. Served as minister of justice in the National Unity Government and held the position of dean of the Faculty of Law and Sharia at the Al-Najah University, and the head of the Department of Jurisprudence and Legislation). Currently an associate professor of civil law at the Faculty of Law at the Al-Najah University, head of the Supervisory Authority at Takaful Insurance Company and head of the Shari'a Supervisory Board of the Palestinian Ijarah Company. He is a member of the Governance Board of the Palestine Islamic Bank and a member of the Ethics and Governance Council of the Accounting and Auditing Organization for Islamic Financial Institutions.

Prof. Maher Hamed Al Houli
Member of the Shari'a Supervisory board

Professor in the field of Jurisprudence and its Fundamentals. Serves as the dean of the College of Sharia and Law at the Islamic University, Gaza, the head of the Sharia Fatwa Department at the Association of Palestine Scholars, the chairman of the Fatwa board at the Islamic University, Gaza, the president of Al Quds Association for Research and Islamic Studies, and the dean of Student Affairs. He has also carried out Sharia and financial arbitration. Supervises master's and doctoral theses and holds a scientific research award - the Islamic Studies Series for the year 2008. Has published many books and scientific literature which are used at universities for undergraduate and master's degree studies and has published many varied and published scientific research papers.

Prof. Hussam El-Din Afaneh
Member of the Shari'a Supervisory Board Until 3/9/2020

One of the scholars specialized in the field of jurisprudence, especially the jurisprudence of financial transactions. Professor of Jurisprudence and Fundamentals with a Ph.D. in Jurisprudence and Fundamentals, from the College of Sharia, Umm Al-Qura University, Kingdom of Saudi Arabia. Professor of Jurisprudence and Fundamentals at Al-Quds University. Chairman of the Shari'a Supervisory Board of Tamkeen Insurance Company. He has published 72 books and researches, supervised 58 master’s and doctoral theses, and participated in the discussion of 42 master’s and doctoral theses. Has worked and written in the field of Islamic financial transactions since 1994. Author of the published series "Yas'aloonk.

Sharia Supervisory Board Report for the year 2020

Praise the Lord

The Sharia Supervisory Board Report on the Bank’s Business for 2020

Presented to Messrs. Shareholders of the Palestine Islamic Bank

Peace be upon you,

In accordance with the assignment letter, we have observed the principles used and the contracts on transactions and applications which the Bank has put forward during the financial period from 1 January 2020 and until 31 December 2020.

We have carried out the required supervision to present our opinion on whether the Bank has adhered to the provisions and principles of Islamic Sharia in addition to the advisory opinions (Fatwa), decisions and guidance which we have issued.

We have carried out our supervision, which included examining the Bank’s documentation and followed procedures on the basis of testing every type of transaction based on the selected sample, making comments and verifying its conformity with adopted Sharia foundations.

We have planned and implemented our supervision in order to obtain all information and explanation we believe necessary to provide us with enough evidence for reasonable confirmation that the Bank had not breached the provisions and principles of Islamic Sharia.

The Bank’s management is responsible for the Bank carrying out its business according to the provisions and principles of Islamic Sharia, and the responsibility of the Sharia Supervisory Board is to form an independent opinion after carrying out the required revisions and supervision to provide you with the following report:

  1. The Board reviewed the work of the Bank carried out between 1/1/2020 and up to 31/12/2020.
  2. The Board responded to all questions and inquiries which had been sent from the Bank’s management and clients during the abovementioned period.
  3. The Board added its notes and corrections to the transactions, agreements and work forms that were presented to it.
  4. The Board reviewed and discussed the Sharia auditing reports on branches and offices presented by the Sharia Auditing Department, and presented its recommendations and comments. The Board noted that there were several repeated comments on financing work in some branches, directed that the recurrence of these comments must be avoided in the future and addressed management as such so that they may remedy it.
  5. The Board adopted the Annual Field Auditing Plan on branches, then the replacement plan under the Coronavirus pandemic and lockdown.
  6. The Board approved and reviewed a number of sponsorship and partnership agreements with different companies and institutions, of which:
  • The Board approved investing a deposit at Qatar Islamic Bank
  • The Board approved a proposal for an investment trust at Jordan Islamic Bank
  • The Board allowed the request for electronic card ordering service during the state of emergency.
  • The Board reviewed and approved the Bank’s investment policy.
  • The Board approved yield of Murabaha Card and postponing benefits and services.
  • The Board approved the yields of payment of vehicle insurance policies in installments.
  • The Board approved yields of Musataha (adverse possession) and Tahkeer (the right of Endowed Land Monoply).
  • The Board adopted templates for an interest-free loan and settlement agreement.
  • The Board adopted the instructions of the Supreme Sharia Supervisory Board at the Palestinian Monetary Authority on early repayment.
  • The Board adopted a Consulting Services Agreement with Watan Investment Company.
  • The Board reviewed and adopted the framework of a Memorandum of Understanding between the Bank, the Ministry of Finance and the General Petroleum Association and the related Agency Agreement.
  • The Board endorsed profit distribution for 2020 which matches what the Sharia Supervisory Board approved at the Bank.
  • The Board endorsed the financial statements of 2020 after implementing the amendments required by management. The Board recommended for the balance of the Charity Fund to be disposed of, limit accounting, and adhere to the decisions of the Board which state that these accounts must be closed at the end of each month.
  • The Board carried out a number of activities which enhanced strengthening the idea of Islamic banking during 2020 by attending many activities, conferences, symposia and scientific forums, most of which were through social-media networks due to the circumstances the country has gone through in the past year.

It is in our opinion:

After the Board has reviewed the contracts which were presented to it and having carried out the necessary amendments, the contracts, transactions and processes which we examined and that the Bank concluded during the aforementioned period were carried out in accordance with the provisions and principles of Islamic Sharia.

All the benefits which were realized from sources or in a manner prohibited by Islamic Sharia, or those which the Board has found breach Sharia standards, Sharia Fatwa (opinion) and Sharia Laws were deposited in the charity box to be spent in righteous ways in accordance with the recommendation of the Sharia Supervisory Board.

The Bank adheres to the decisions issued by the Sharia Supervisory Board at the Bank and the Supreme Sharia Supervisory Board at the Palestinian Monetary Authority.

There is no legal impediment to adopting the manner that the Board of Directors chose for each shareholder to take out their own Zakat. The percentage of Zakat imposed on shares has been calculated to be (0.0557 US Dollars) per share, which must be notified to the shareholders. The Board calls everyone to perform Zakat in accordance with Sharia provisions and to withdraw their Zakat themselves.

The Sharia Supervisory Board thanks the general public who deal with the Bank and the shareholders for their trust, and also thank the Bank’s management and personnel for their cooperation with the Board and may God reward everyone.

Only Allah leads to prosperity and guides to the straight path

Ramallah 18 Rajab 1442 Hijri, 02/03/2021 A.D

Dr. Ali Mohammad Al-Sertawi (Chariman)
A.D. Hussam Al-Dein Affanah (Member)
A.D. Maher Hamed Al-Houly (Member)
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