Islamic credit cards in Bahrain

The market

Bahrain is the home of AAOIFI (headquartered in Manama) and the CBB Rulebook makes AAOIFI's Shari'a standards part of the compliance opinion an Islamic bank's SSB must publish each year. NO Bahraini Islamic credit card examined here is priced as a percentage profit rate. Both live issuers — Bahrain Islamic Bank and Al Salam Bank — price their cards as a fixed MONTHLY SERVICE FEE in Bahraini dinars, capped annually per tier, which the bank may waive in whole or in part depending on how the cardholder repays. Neither bank names a Shariah contract for its cards in any published document that could be retrieved (no use of 'Ujrah', 'Tawarruq', 'Murabahah' or 'Bai' al-Inah'), so the structure field is recorded null for every Bahraini card rather than inferred. The 'charity clause' is universal and is published as a priced line rather than buried in the T&C: BisB's fee schedule literally names two rows 'Late Payment Fee – Goes to Charity' and 'Over Limit Fee – Goes to Charity' (BD5 each, every tier), and Al Salam footnotes its BD5.500 late payment penalty '*Late Payment Penalty will be transferred to charity account' and additionally routes any FX mark-up above actual cost to charity. Bahrain has just been through a consolidation wave: Al Salam Bank absorbed Ithmaar Bank's consumer business and Kuwait Finance House – Bahrain (now ASB Finance B.S.C. (c)), while NBB acquired Bahrain Islamic Bank. The practical result is that a Bahraini consumer's choice of Shariah-compliant credit card is now essentially two banks and nine products.

Who decides what is compliant

Two-tier and unusually prescriptive. Every Bahraini Islamic bank licensee must run a Shari'a Governance structure consisting, at a minimum, of a Shari'a Supervisory Board (SSB), a Shari'a Coordination and Implementation Function, an Internal Shari'a Audit Function and an Independent External Shari'a Compliance Audit (IESCA) — CBB Rulebook Volume 2, Module SG, paragraph SG-1.1.2. The bank's own SSB fatawa and rulings are binding on the licensee (SG-2.3.1). Above the bank sits the CBB's own Centralised Shari'a Supervisory Board (CSSB): licensees 'must comply with the Shari'a pronouncements and opinions issued by the CSSB' (SG-2.10.1), and where a bank's SSB and the CSSB disagree, 'the opinion of the CSSB shall prevail' (SG-2.10.2). This national-board-overrides-bank-board arrangement is the defining feature of Bahraini Shari'a governance and the reason Bahraini card products are markedly more uniform than, say, Malaysian ones.

Rules that limit you

• CBB Rulebook Vol 2, SG-1.1.2 — every Islamic bank licensee must maintain an SSB, a Shari'a Coordination and Implementation Function, an Internal Shari'a Audit Function and an Independent External Shari'a Compliance Audit
• CBB Rulebook Vol 2, SG-2.3.1 — 'The fatawa and rulings of the SSB are binding on the Bahraini Islamic bank licensee.'
• CBB Rulebook Vol 2, SG-2.10.1 — 'In all cases, Bahraini Islamic bank licensees must comply with the Shari'a pronouncements and opinions issued by the CSSB.'
• CBB Rulebook Vol 2, SG-2.10.2 — where the CSSB and a bank's own SSB conflict, 'the opinion of the CSSB shall prevail'
• CBB Rulebook Vol 2, SG-6.1.1 — the annual SSB report must express an opinion on compliance with, among other things, 'AAOIFI's Shari'a standards, relevant rulings of the CSSB and the regulations, resolutions and directives issued by the CBB'