CIBAFI Submitted Comments to the Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI)

  • 18/Aug/2022

18th August 2022, Manama, Kingdom of Bahrain | Aligned with its role as an advocate of the Islamic Financial Services Industry (IFSI), the General Council for Islamic Banks and Financial Institutions (CIBAFI), the global umbrella of Islamic financial institutions, announced that it has submitted its comments on 17th August 2022 to the Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI) on the Exposure Draft of Governance Standard “Syndicated Financing”.

The Exposure Draft (ED) has been issued in February 2022 and is open for public consultation until 21st August 2022.

In its comments, CIBAFI thanked the AAOIFI for giving the opportunity to the Islamic Financial Services Industry to comment on the ED and provided collective feedback of its member institutions from over 34 jurisdictions, comprising the following key points.

First, in common practice, syndicated financing structures have a function called “facility agent”. Although this role is often played by the lead arranger of syndicated financing, we found that many of CIBAFI members are used to its being a separate function. Therefore, it is important that this function needs to be defined separately in the ED and proper consideration be given to its role, responsibilities, and relationships with other parties. 

Second, the ED present the need of multiple Shariah supervisory boards (SSBs) to govern various aspects of the transactions in the syndicated financing. However, this does create some concern among CIBAFI members that a need for approval from multiple SSBs at many stages of the transaction may delay important decisions, for example on restructuring.

Third, CIBAFI recognizes that the ED is intended to be an industry standard rather than one mandated by regulators. However, we think that more flexibility should be given, especially in areas where it may be industry practice to split certain documents, or for matters in one document to be cross-referred to in another, rather than reproduced in their entirety.

Fourth, the ED needs to give greater coverage to situations in which the participants, in Shariah-compliant syndicated financing transactions, are not all Islamic financial institutions. One possibility is that conventional financial institutions may participate in such financing. This possibility is explicitly recognised in AAOIFI SS 24. The ED generally, does not provide sufficient guidance on how governance should apply in such a situation, though it does deal with hybrid financing.

Full comments submitted to the AAOIFI are available on CIBAFI’s website:

In addition to policy and regulatory advocacy, CIBAFI continues to support the Islamic Financial Services Industry through various activities and initiatives. These include providing industry stakeholders with a platform to discuss emerging issues, representing the industry at major global financial events, and sharing knowledge through specialized publications and comprehensive training programmes.

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