Sharī‘ah Governance and Sharī‘ah Non-Compliance Risk Management: A Maqāsid Sharī‘ah Based Appraisal

Abstract

This research evaluates the efficacy of Shariah Governance (SG) and the mitigation of Shariah Non-Compliance Risk (SNCR) within the Pakistani Islamic Banking (IB) sector, utilizing the teleological framework of Maqāsid al-Shari’ah. Employing a qualitative content analysis of the State Bank of Pakistan’s (SBP) Shariah Governance Framework (SGF) alongside contemporary academic literature, the study identifies the specific fiduciary roles mandated for Shariah compliance within Islamic Financial Institutions (IFIs). The analysis demonstrates that systemic exposure to SNCR not only invalidates specific financial contracts but also compromises the institutional stability and solvency of IBs. The findings suggest that the SGF successfully operationalizes Maqāsid Khassah (specific objectives) by safeguarding the wealth and religiosity of stakeholders. Furthermore, the study confirms that robust SG mechanisms facilitate the realization of broader objectives, including financial transparency, equitable wealth distribution, and socio-economic justice.

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