CBUAE urges IFIs to appoint UAE nationals as trainee members

In line with the leadership’s vision and the CBUAE’s commitment to implement the Emiratisation strategy in the financial sector, the Higher Shari’ah Authority at the CBUAE (HSA) has issued a Resolution encouraging Islamic financial institutions (IFIs) to appoint UAE nationals as trainee members at the Internal Shari’ah Supervision Committees to train them in Islamic Finance Fatwa.

The Resolution includes guidance for IFIs on the membership of the trainees, required qualifications and competencies, appointments process, as well as, training and development plan for the trainee members.

The IFIs that should not have less than five members in the Internal Shari’ah Supervision Committees may appoint two trainees as members of the ISSC to serve for the fifth membership. The two trainee members will be considered for one full membership.

The trainee members do not have the right to vote on the Internal Shari’ah Supervision Committees resolutions, but may participate in discussions, research and other tasks that Committees may delegate to them. A trainee member may become a full ISSC member, with the entitlement to vote, after completing at least three years as a trainee member and meeting the specific qualification requirements.

The Resolution specified the qualifications and competencies required for trainee members, including holding a Masters’ degree or its equivalent (as a minimum) in Islamic Shari’ah, particularly in the jurisprudence of transactions, from a recognised university for its Shari’ah studies, or have a minimum of five years’ experience in fatwas related to the jurisprudence of financial transactions. In addition, trainee members should have a minimum of five years of academic experience in post-graduate teaching, Shari’ah supervision, Islamic finance or fatwas.

The Resolution also requires IFIs to establish a training and development plan for trainee members, which will include a minimum number of professional certificates to be obtained, which are issued by specified international organisations.

The Central Bank of the United Arab Emirates (CBUAE) has issued recently its Financial Stability Report for 2021, which outlines the measures taken by the CBUAE to support the national economy during the COVID-19 pandemic and safeguard the stability of the financial system.

Among these key steps were the CBUAE’s gradual exit strategy from the Targeted Economic Support Scheme (TESS) as the UAE economic recovery commenced, with the first phase completed by the end of 2021, and the second phase concluded by the end of June 2022. The CBUAE will maintain the final third phase of TESS measures during the second half of 2022.

The CBUAE also conducted risk-based supervision and solvency and liquidity stress tests to assess potential vulnerabilities. Overall, these tests indicated that the UAE banking system had adequate capital and liquidity buffers to withstand severe shocks.

The report outlines the risks for the banking system, which stem from the potential deterioration of assets quality and insufficient change in banks’ business models in light of the global digital transformation, climate change and the rising governance requirements.

The response by the UAE government to the COVID-19 pandemic contributed to the rebound in overall UAE economic activity. The CBUAE measures supported the resilience and recovery of the nation’s banking system and the broader financial system to pre-pandemic levels.

Furthermore, the report covers the CBUAE’s payment systems that proved to be robust during 2021. With the acceleration of digitalisation of financial services, the central bank further improved its systems, enhanced digital transformation, and ensured cyber resilience.

Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said, “The Financial Stability Report records the CBUAE’s approach to identifying and mitigating potential systemic risks and safeguarding the stability and resilience of the UAE financial sector. The report projects a positive outlook for the country’s economy and financial system in 2022.

“The global macro-financial outlook, however, could be affected by supply chain disruptions, rising inflationary pressures, and further escalating geopolitical tensions. We will continue to monitor evolving global vulnerabilities closely and stand ready to take additional measures if needed.