From Decentralized to Centralized Shariah Governance: A Proposal for a Central Shariah Supervisory Board in Türkiye

Abstract

Shariah governance plays a critical role in ensuring that financial institutions operate in accordance with Islamic principles, mitigating the risk of Shariah non-compliance, and strengthening confidence in the broader Islamic finance sector. Currently, the regulatory framework in Türkiye exhibits several structural shortcomings, including the absence of a central and binding authority covering the entire sector, limited institutional scope, weak legal enforceability, insufficient transparency, and the lack of independent external audit mechanisms. Existing literature highlights significant gaps in the design of a comprehensive central advisory board model, particularly within the Turkish context. Addressing this critical gap, the present study proposes the establishment of an Asian-style Central Shariah Advisory Board (CSAB) specifically tailored to Türkiye. In this study, Türkiye's existing Shariah governance structure was comprehensively analyzed using comparative qualitative research methods, drawing insights from international standards (such as AAOIFI and IFSB) and the two-tier Malaysian governance model. The proposed centralized structure aims to ensure that all rulings and standards are strictly binding across diverse sectors—including participation banks, takaful, and fintech—while maintaining consistency with international best practices and building upon Türkiye's accumulated local experience. By filling these institutional and legal gaps in Shariah governance, the proposed CSAB model seeks to significantly enhance investor trust in Islamic financial institutions and sustainably strengthen Türkiye's strategic aspiration to become a leading global hub for Islamic finance.