THE APPLICATION OF THE METHODOLOGY OF FATWA BY SHARIAH ADVISORY BOARD IN CENTRAL BANK OF MALAYSIA (Alias bin Azhar (PhD

Mohammad Azam bin Hussain College of Law, Government & International Studies Universiti Utara Malaysia

Abstract The financial institutions must gain the approval from the Shariah Advisory Board of Bank Negara Malaysia before offering its facilities to the public. In order to approve or issued any fatwa on Islamic facilities brought before them, the Board has to follow the standard procedures. These include the Shariah principles, the existing laws and the current economic situations. As the result, the methodology of fatwa must be examined deeply in order to ensure the validity of fatwa and strengthening the facilities offered by the banking and financial institutions. This paper will observe the methodology used by Shariah Advisory Board in making fatwa which will realize the objectives of Shariah in Islamic finance.