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Roszaini Haniffa and

Such a statement indirectly supports the view of economic rationality where firms try to reduce their tax. If the true meaning of zakah is understood, there should not be disputes regarding the amount payable as any amount paid above the zakah threshold is considered charity. Interestingly, the same statement was communicated in 2004, suggesting that the dispute has still not been resolved.

Only BIB and DIB disclosed attestations from the SSB that the sources and uses of zakah and the amount computed for zakah was according to the Islamic principles. Although two IBs disclosed the balance on zakah and charity funds, neither provided reasons for the balance. Similarly, disclosure of sources and uses of charity was minimal except for KFH, especially in 2004, which may be related to the events in Iraq:

To effectively serve the community, KFH took part in several development projects in and outside Kuwait.... Prisoners medical and orientation center was handed over by the con- tractor, which is built on 12,000 m2 and accommodate 450 persons to have medical orientation programmes. KFH do- nated KD 1,425 million to the Ministry of Health to build new 15 aid centers to develop medical emergency services (KFH Annual Report 2004, p. 16).

One unique feature of IBs is the provision of qard al- hassan (benevolent/good faith funds), i.e. providing loans without expecting any extra payment over and above repayment of the principal. Four IBs provide the statement of sources and uses of benevolent/ good faith funds in their annual reports. However, some of the uses of such funds are questionable, especially when they are for extravagant purposes. The lack of policy as to who are eligible and the purpose of the funds may result in abuse’ of such funds. The less advantaged in society should be given priority in accessing such funds if social justice is to be upheld by the IBs. In addition, the IBs should have a clear policy regarding non-repayment of such funds but this was not communicated by the IBs surveyed.

Dimension: commitments toward employees

The EII ranking for the seven IBs over the 3-year period was found to be inconsistent. In 2002, both ADIB and BIB shared the highest ranking but the position was taken over by SIB in 2003 and 2004.

Mohammad Hudaib

DIB improved its position from being the lowest in 2002 to fourth in 2004. Based on the 3-year mean, SIB scored the highest followed by ADIB and BIB, with the lowest being ARB. The range for this dimension was from 0.18 to 0.67.

None of the IBs surveyed communicated on employees’ welfare except for ARB in 2002, where they disclosed their commitments to provide medi- cal benefits for their employees. However, in 2003 and 2004, SIB communicated more regarding employees’ welfare:

... a social committee was formed to organise social events involving employees and their families. A number of such events were organised which included a bowling competition, tennis tournament, football league, annual Ramadan dinner and long service awards for the employees as well as a boat trip to the Hawar Island. The Bank also organised a number of lectures by prominent scholars and specialist (SIB Annual Report 2003, p. 15).

Four IBs indicated that they provide training for their staff to enhance their understanding of the Shari’ah related to Islamic banking transactions, as can be seen in the following statement by BIB:

Staff was extensively educated about the Shari’ah aspects related to the Bank’s business activities to enhance their understanding of Islamic banking transactions (BIB Annual Report 2002, p. 12).

This effort is commendable because in offering un- ique products, it is vital that staffs are provided with special training to facilitate and improve the services offered. In other words, if employees are not well versed in the concepts of the Islamic banking system, they may not be able to serve or convince clients of the products offered, which may damage the cor- porate ethical identity.

Dimension: commitments toward debtors

The 3-year mean EII ranged from 0.33 to 1.0, the lowest being ARB and the highest position shared by BIB and DIB. Four IBs, viz. ADIB, ABB, ARB and SIB, did not communicate the amount of debts written off. In addition, both ADIB and SIB did not disclose their debt policy, while ARB was the only IB that did not provide details on type of lending

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