The Islamic Financial Services Board (IFSB) is the international body that sets prudential standards for Islamic banking, takaful (Islamic insurance) and Islamic capital markets. Based in Kuala Lumpur and operating since March 2003, it plays a role for Islamic finance similar to the one the Basel Committee plays for conventional banks, according to the IFSB’s own account of its establishment.
IFSB at a glance
| Founded | Inaugurated November 2002; operations began March 2003 |
| Headquarters | Sasana Kijang, Bank Negara Malaysia, Kuala Lumpur |
| Members | 187 members across 58 jurisdictions (March 2023) |
| Output | Around 40 standards, technical notes and guiding principles |
| Secretary-General | Dr Ghiath Shabsigh (since April 2024) |
Membership and output figures are from a speech published by the Bank for International Settlements.
Why was the IFSB created?
By the early 2000s Islamic banks were operating in dozens of countries, but supervisors had no shared rulebook for them. Conventional prudential standards did not account for features such as profit-sharing investment accounts, where depositors share in a bank’s returns and losses. The IMF announced the plan for a dedicated standard-setter in May 2002, Malaysia passed the IFSB Act 2002 to host it, and a group of central banks became its founding members.
What does the IFSB do?
Its work falls into three areas.
- Standards. It issues prudential standards on capital adequacy, risk management, corporate governance, Shariah governance systems, disclosure and supervisory review. Its first two standards came out in December 2005.
- Core principles. IFSB-17, its Core Principles for Islamic Finance Regulation (banking segment), was endorsed by the IMF in May 2018 and added to the Financial Stability Board’s Compendium of Standards in December 2019.
- Data and research. It publishes the annual Islamic Financial Services Industry Stability Report and maintains prudential data on Islamic banks across member jurisdictions.
Who are its members?
Members fall into three groups. Full members are central banks, monetary authorities and other regulators. Associate members include other supervisors and intergovernmental bodies. Observer members include banks, law firms, auditors and professional bodies. The membership mix means the people who write the standards are mostly the people who enforce them.
How is the IFSB different from AAOIFI?
The two are often confused. The IFSB writes prudential rules for supervisors: how much capital an Islamic bank holds, how it manages liquidity, how it is governed. AAOIFI, based in Bahrain, writes Shariah, accounting, auditing and ethics standards: how products are structured and how transactions are reported. A bank in a country that adopts both would follow the IFSB on prudential matters and AAOIFI on accounting and Shariah structuring. Read our Organizations profile of AAOIFI for more on its side of the work.
Who has led the IFSB?
The Secretary-General runs the secretariat. Past holders include Rifaat Ahmed Abdel Karim, Jaseem Ahmed and Bello Lawal Danbatta. Dr Ghiath Shabsigh took the role in April 2024.
How do you engage with the IFSB?
Regulators can apply for membership, and industry firms can join as observers. Its standards, exposure drafts and the stability report are free to download from ifsb.org. Exposure drafts are open for public comment before adoption, which is the main route for practitioners to influence new rules.
FAQ
In Kuala Lumpur, Malaysia, at Bank Negara Malaysia’s Sasana Kijang complex.
Not by themselves. They take effect when a national regulator adopts them into its own rules.
An annual report on the size, growth and resilience of the Islamic financial services industry across banking, capital markets and takaful.
No. The Islamic Development Bank is a multilateral development lender. The IFSB is a standard-setting body, though the IsDB is among its members.
