Islamic International Rating Agency reaffirms Shari'a quality rating of Jordan Islamic Bank

Owned in majority by the Al Baraka Banking Group (ABG), one of the most prominent Islamic Banking Groups in the world, JIB is the largest Islamic bank in Jordan. Commitment to maintaining and enhancing the level of compliance with the spirit of Shari'a rulings in Islamic finance, stems from the vision of ABG and the Board of Directors of JIB, as well as the bank's managerial leadership.

Senior management personnel are well-versed in Islamic jurisprudence, with a number of them holding doctorates in Islamic finance and methodologies of jurisprudence in Islamic banking. Employee selection process and employee training in Islamic finance leads the way to a committed employee base.

A Shari'a Supervisory Board (SSB) comprising four experienced members and governed by specifically laid down Terms of Reference, is in place.

Besides one member, who has been inducted in the on-going year, the remaining SSB personnel have had a lengthy association with the bank. The SSB approves all banking contracts, ensures periodic review of operations with regards to the level of Shari'a compliance, reports to the shareholders and also advises the bank on general matters to raise the standard of Shari'a related practices at the bank. While the SSB plays a guiding role in the bank, there is room for enhancement of the SSB members' direct involvement in random examination of the bank's transactions and affairs and cultivating on ground contact with the bank's employees.

The bank has a Shari'a audit and compliance department within the overall internal audit and Shari'a department. Segregating the functions of Shari'a audit and Shari'a compliance, which is currently combined, is also more in line with best practices. The department has approved review procedures and manuals for Shari'a compliance, audit and control which are comprehensive and allow for a stringent review of transactions and their underlying structure.

While the bank employs a variety of Islamic modes of finance; Murabaha remains the dominant transaction mode. Internal research in the area of product development may lead to structure refinement and innovation that can contribute to Islamic banking globally. As a strong franchise in Shari'a compliant banking, JIB can play a leading role in this regard.

Transparency and disclosures in general and disclosures relevant to Investment Account Holders (IAH) in particular are comprehensive. An inclusive policy framework for Sharia compliant banking is also in place.

High standards of Shari'a compliance have contributed to a healthy balance sheet and strong dividend payout history. In line with banking sector trends, returns for IAH have trended downwards over the last few years but are in sync with customers' expectations.

The bank has also designed specific channels to enable the bank's contribution to an Islamic society. Overall corporate culture is reflective of well-entrenched Islamic values.