How does National Sharia Board issue a fatwa on product?

It is quite strange that this kind of question is not categorized as FAQ (Frequently Asked Question). In fact the process of issuing a fatwa is a process that become a pillar in governance  system of an organization. For this reason, IFSB (Islamic Financial Service Board) put the question into a clause in its Sharia Governance Standard published recently.


National Sharia Board (Dewan Syariah Nasional, DSN) is an autonomous body under Majelis Ulama Indonesia (MUI, Indonesian Council of Ulama), established in 1998 as the body that supervise sharia compliance of Islamic Financial Institutions in Indonesia. Its main function is two: First, issuing fatwa related with products and transactions of Islamic Financial Institutions and second, recommending sharia supervisory board in the IFIs. By its establishment, National Sharia Board avoid conflicting fatwas that might arise among Sharia Supervisory Board fo Islamic Financial Institutions. By the time of establishment, there was only one SSB in the only Islamic bank, Bank Muamalat. In a seminar co-hosted by Majelis Ulama Indonesia, PT. Danareksa and Bank Muamalat in 1997 on Islamic Unit Trust, this prophecy -that there will be many SSB due to establishment of more Islamic Financial Institutions- was stated by many parties, raising their worrisome on opposite fatwas, that certainly will lead to confusion amongst people.

An Islamic Financial Institution that needs fatwa from DSN should first prepare its product details and present it before its Sharia Board. If the board decides that it does not need to be forwarded to DSN because it is already covered in existing fatwas, then it suffice them to have an opinion that the new product already comply to sharia. This opinion will be forward, along with product proposal to respective regulator. However, if Sharia Board decides that the product is considered a new one and need a special fatwa, then the Islamic Financial Institution should send their proposal to DSN along with introducing opinion from the Sharia Board.

The next step is the executive committee in DSN will analyse the proposal and find sources that discuss the product from sharia perspective, along with their arguments from all sources of Islamic law: Quran, Hadith, Ijma and Qiyas.

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