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EghtesadOnline: The Council for Islamic Jurisprudence in the Central Bank of Iran–aka Fiqh Council–is to obtain an official legal status through a parliamentary vote, announced a member of the council.

“Soon and with the approval of the parliament, the Fiqh Council of the central bank will morph out of its current advisory status to become an official entity within the bank,” Seyyed Abbas Mousavian also told IBENA.

With the emergence of Islamic banks around the world, he said, it was gradually felt that coupled with executive management and technological and technical supervision, a council must be formed with the mandate of “matching instruments, approaches and tactics in design and execution, with the principles of Sharia”.

Mousavian noted that this was the reason for Islamic banks to set up Sharia committees and fiqh councils to offer consultations in matters pertaining to Islamic jurisprudence, Financial Tribune reported.

The same need was felt in Iran, which led to the formation of an Islamic banking advisory council within the Monetary and Banking Research Institute some 15 years ago. The advisory council began to convene and offer its services to the banking system. The body eventually moved to the CBI and resumed its activities there.

“The main part of the activities of Fiqh Council is to supervise over the instruments, approaches and contracts used within the banking system, but the council had no official status and convened under the authority of the CBI governor,” he said.

“Although after the appointment of [current CBI Governor Valiollah] Seif, a permit was obtained from the central bank, which further entrenched the council and gave it a more official standing.”

The Fiqh Council member noted that even after this development, the council continued to perform its advisory role. He added that the banking sector came to the conclusion that if the entity is to have a real impact and for its approved directives to become legally binding, its status needs to be enhanced and accorded official authority.

Mousavian stressed that the decrees issued by the council must be “legal requirement for the banks”.

In the sixth five-year development plan (2017-22), a few articles and provisions addressed the issue, he said, adding that First Vice President Es’haq Jahangiri wrote a letter to the Leader Ayatollah Seyyed Ali Khamenei who advised that the Fiqh Council be formed within the CBI as an official entity with the authority of issuing legally binding decrees.

According to Mousavian, “fortunately the initial steps have been taken and the parliament has corrected two minor flaws raised by the Guardians Council–the body that verifies the Islamic and constitutional compliance of parliamentary measures–and I hope that after the regulations are approved, this parliamentary article would be finalized”.

As announced by CBI Vice Governor Akbar Komijani in late August, the official formation of Fiqh Council has been stipulated in the Central Bank Law, one of the two major laws designed to reform the Iranian banking system alongside the Banking Reform Law, “in order to ensure all the policies are Shariah-compliant”.

In fact, lawmakers in mid-January had also approved the formation of the council, decreeing that it will consists of five Islamic jurisprudents familiar with banking and financial issues, the governor of CBI, a lawyer and an economist—both familiar with banking issues, a lawmaker well-versed in Islamic banking regulations and the chief executive of a public-sector bank.  

Iran Banking CBI Central Banking of Iran. Central Banking of Iran Iran Fiqh Council Abbas Mousavian