The active role of Sharia Supervisory Board in Sharia compliance and risk mitigation: a case study of Bank NTB Syariah, Indonesia

Abstract

This study aimed to shed light on the roles of the Sharia Supervisory Board (SSB) in carrying out their tasks, particularly in ensuring the compliance of Sharia banks and mitigating its risks at BNTB Syariah. Unless well carried out, it will result in several risks, mainly related to reputation and finance. Drawing on a qualitative research approach, this study garnered data from many sources, such as interviews, observations, and documentation. The data were analyzed using the descriptive-analytic method. The findings showed that (1) the involvement of SSB in carrying out their roles and monitoring the products of Sharia banks is portrayed by the three activities: (1) regular and accidental meetings discussing halal products, which were planned and already in the sale; (2) direct monitoring visiting the bank branches; and (3) undertaking coaching with a broader scope, such as explaining the sharia aspects before purchasing of products, and ethical outfit and service towards the costumers. These tasks resemble the so-called "DPS plus" (SSB plus). SSB also complied with the national Sharia council (DSN), excepts on certain items exclusive of the Fatwa of the National Sharia Advisory board (NSAB). The solution and mitigation offered by SSB in undertaking their tasks were always based on the Fatwa stipulated by the Islamic Ulema Council, following the Islamic jurisprudence and law. It was also found that risk mitigation was executed by promoting sharia financial literacy and active monitoring.