Sharia Supervisory Board Effectiveness in Islamic Corporate Governance: Examining Compliance Mechanisms, Challenges, and Strategic Enhancement Pathways
Keywords:
Sharia Supervisory Board; Islamic corporate governance; Sharia compliance; Islamic finance; financial regulationAbstract
Background: The global expansion of Islamic finance has intensified the need for robust governance mechanisms to ensure authentic Sharia compliance in financial institutions. Within this context, Sharia Supervisory Boards (SSB) play a central role in maintaining alignment between business operations and Islamic principles.
Objective: This study aims to examine the roles, operational mechanisms, challenges, and enhancement strategies of SSB within Islamic corporate governance frameworks.
Methods: A qualitative approach was employed through a comprehensive literature review and regulatory analysis, integrating perspectives from Islamic governance and contemporary financial practices. The study also considers fatwa guidelines issued by Majelis Ulama Indonesia as part of the analytical framework.
Results: The findings reveal that SSB performs key functions including compliance monitoring, advisory roles, auditing, and strengthening public trust. However, implementation faces challenges such as limited independence, competency gaps in financial technology, multiple board memberships, and lack of standardized Sharia audit frameworks. Effective SSB governance is associated with improved institutional reputation, customer confidence, and compliance performance.
Conclusion: Strengthening SSB effectiveness requires competency standardization, enhanced regulatory oversight, digitalization of Sharia audits, and integration with risk management systems. These strategies are essential to ensure sustainable Sharia compliance in increasingly complex Islamic financial environments.
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