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The effectiveness of Shariah supervisory board on supervision and counselling in Shariah rural bank Mitra Cahaya Indonesia Yogyakarta

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  • Selamat Muliadi

    (Islamic University of Indonesia, Yogyakarta, Indonesia)

  • Nur Feriyanto

    (Islamic University of Indonesia, Yogyakarta, Indonesia)

Abstract

Islamic banks underlie fundamental principles of the Shariah encompassing all business activities, financial contracts and transactions. The Shariah Supervisory Board (SSB) plays an important role in the Islamic banking system and it has an important impact on their performance and stability. The obedience of Shariah is an obligation which must be implemented each bank based on Shariah. The goal of the research is to determine the effectiveness of supervision and counselling in the implementation of Shariah principles by the SSB in Shariah Rural Bank Mitra Cahaya Indonesia Yogyakarta. As an independent agent of National Shariah Board-Indonesian Ulema Council works overseeing and has big responsibility. In overseeing new product, there are several steps being taken by the SSB, i.e., first, the SSB asked for an explanation from the board of directors of the new products that will be issued. Second, check if the new product is in accordance with the Islamic principles. Third, give an opinion on the Shariah's new product. This study uses a qualitative approach with descriptive data. Data were obtained through interviews, observation and literature review.The study concluded that the SSB is a significant department in Shariah Rural Bank Mitra Cahaya Indonesia Yogyakarta like the other departments. The interference of it in decision-making and management could adversely affect the Shariah Rural Bank Mitra Cahaya Indonesia Yogyakarta. In general, the supervision by the SSB in Shariah Rural Bank Mitra Cahaya Indonesia Yogyakarta has been effective because the SSB not only does the good supervision but also makes improvements and developments. The SSB monitor with his best ability and gives priority to the Shariah Rural Bank Mitra Cahaya Indonesia Yogyakarta.

Suggested Citation

  • Selamat Muliadi & Nur Feriyanto, 2018. "The effectiveness of Shariah supervisory board on supervision and counselling in Shariah rural bank Mitra Cahaya Indonesia Yogyakarta," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 4(1), pages 9-17.
    • Handle: RePEc:apb:jabsss:2018:p:9-17
    DOI: 10.20474/jabs-4.1.2
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    Cited by:

    1. Lia Dahlia Iryani* & Winwin Yadiati & Eddy Mulyadi Supardi & Iwan Triyuwono, 2019. "The Moderating Effect of Shariah Governance on Financial and Maqasid Shariah Performance: Evidence from Islamic Banks in Indonesia," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(2), pages 264-274, 02-2019.
    2. Sahibzada Muhammad Wasim Jan, 2020. "Shari’ah Governance of Islamic Banking Institutions in Pakistan: An Analytical Overview," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 6(6), pages 286-299.

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