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ISLAMIC FINANCIALLEGAL FRAMEWORK

Mahyuddin Khalid e m k a

y @ s a l a m . u i t m . e d u . m

y

DE ELO!MEN" OF "#E MALA$SIAN ISLAMICFINANCIAL S$S"EM


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CON"EN"

MALA$SIAN ISLAMIC FINANCIAL S$S"EM#IS"ORICAL DE ELO!MEN" OF ISLAMIC%ANKING

NSC RE!OR" ON %ANK ISLAM MALA$SIA&S" !#ASE OF DE ELO!MEN"' ND !#ASE OF DE ELO!MEN"

(RD

!#ASE OF DE ELO!MEN"CONCL)SION


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MALA$SIAN ISLAMIC FINANCIAL S$S"EM

C*m+,ehensi-e Islami /nan ial system *-e,in0 all/nan ial se t*,s *+e,atin0 in +a,allel 1ith *n-enti*nal /nan ial system

Di-e,sities *2 +laye,s "1el-e 2ull34ed0ed Islami 5ankin0 instituti*ns

' d*mesti Islami 5anks ( 2ull34ed0ed 2*,ei0n *1ned Islami 5anks 6 Islami 5ankin0 su5sidia,ies

7 taka2ul *+e,at*,s

S*und and ,*5ust Islami /nan ial instituti*ns 0*-e,ned5y inte,nati*nal 5est +,a ti esRa+id 0,*1th 1ith 1ide ,an0e *2 +,*du t and se,-i es Retail8 *,+*,ate 9 in-estment 5ankin0

Inte,nati*nally inte0,ated 1ith inte,nati*nal Islami/nan ial system

3


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Mit Gham,8 E0y+t

&7:( !il0,ims; Fund %*a,d


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#IS"ORICAL DE ELO!MEN" OF ISLAMIC%ANKING

",aditi*nal Malay Muslim s* iety is -e,y auti*us inin-*l-in0 themsel-es in ,i5a t,ansa ti*nsIn *,de, t* a-*id inte,est35ased t,ansa ti*ns in0ettin0 ash *, li uidity8 they +,a ti e a l* al

ust*ma,y t,ansa ti*n kn*1n as =ual =an=i< *nditi*nal sale>.

"he C*u,ts ,e *0ni e =ual =an=i as a Malayust*ma,y t,ansa ti*n a,isin0 *ut *2 ,eli0i*us*nside,ati*n

A *,din0 t* )n0ku A. A i 8 the main +u,+*se *2sa-in0s 2*, Malay Muslims 1as t* meet theeB+enses 2*, the =*u,ney t* +e,2*,m ha=8 thus they+,e2e,,ed t* use t,aditi*nal 1ays *2 sa-in0s.


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6


In Malaysia8 Islami 5ankin0 an 5e t,a ed 5a k t* its,**t in &7:(8 1ith the esta5lishment *2 the Lem5a0a),usan dan "a5un0 #a=i


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M*-e t*1a,ds esta5lishin0 an Islami 5ank in Malaysia 1asinitiated 5y -a,i*us +,i-ate +a,ties e.0 du,in0 the K*n0,es Ek*n*mi %umi+ute,a


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8


L)"# unde,t**k a study *n the esta5lishment *2 an Islami5ank in Malaysia. "he 0*-e,nment a e+ted the +,*+*sal 5y L)"# anda++*inted a Nati*nal Stee,in0 C*mmittee *n Islami %ank t* study -a,i*us +,*+*sals 2*, the esta5lishment *2an Islami 5ank.

"he NSC 1as 0i-en the 2*ll*1in0 tasksH "* study and identi2y -a,i*us ,iti al as+e ts *2 Islami 5ankin0

su h as the 5asis *2 the esta5lishment8 a,eas *2 *+e,ati*n and5usiness ,elati*nshi+s 1ith the ust*me,s and *the, /nan ialinstituti*ns.

"* eBamine the suita5ility *2 Islami 5ankin0 in the Malaysian*nteBt 2,*m -a,i*us +*ints *2 -ie1 in ludin0 ,eli0i*us8 le0al8

,a ial8 s* ial and de-el*+ment and "* +,esent t* the G*-e,nment ,e *mmendati*ns ,e0a,din0 the

esta5lishment *2 J%ank Islam Malaysia;


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NSC RE!OR" ON J%ANK ISLAMMALA$SIA;

An Islami 5ank8 1hi h *+e,ates a *,din0 t* the ,ules *2Sha,iah8 sh*uld 5e esta5lished +,*-ide se,-i es and*+e,atin0 +,*/ta5ly.Only *ne Islami 5ank sh*uld 5e esta5lished.

"he +,*+*sed Islami 5ank sh*uld 5e in *,+*,ated as alimited *m+any unde, the C*m+anies A t &7:@.

"he Islami %ankin0 A t needs t* 5e le0islated in *,de, t*+,*-ide 2*, the li ensin0 and su+e,-isi*n *2 the Islami 5ank

"he Cent,al %ank sh*uld administe, the Islami %ankin0 A t. "he +,*+*sed Islami 5ank sh*uld set u+ a Reli0i*us

Su+e,-is*,y C*un il t* su+e,-ise the *m+lian e *2 its*+e,ati*ns 1ith Sha,iah +,in i+les. "he +,*+*sed Islami 5ank sh*uld 5e named J%ank IslamMalaysia;.


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Gradual and pragmatic

..a hie-ed si0ni/ ant milest*nes in 5uildin0 *m+,ehensi-e andinte0,ated Islami /nan ial system 1ith di-e,sity *2 +laye,s .

Milest*nes

&7:7 &7 ( &77( '??(

!il0,ima0e Fund %*a,d

Bank IslamMalaysia Bhd.

Bank MuamalatMalaysia Bhd.

Foreign IslamicbanksFull-fledgedIslamic banks

Conventional banks offer Islamic window

akaful!perators

"yarikat akafulMalaysia Bhd.

akaful #asional$ Mayban akaful$ akafulIklhas$ Commerce akaful

Islamic subsidiary

Islamic money markets

S"AGES OF DE ELO!MEN"10


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Instituti*nal 9Re0ulat*,y

De-el*+ment

!,*du t andma,ket

de-el*+ment

Le0al and Sha,iah2,ame1*,k

Enhan ement *2kn*1led0e and

eB+e,tise

DE ELO!MEN"AL FOC)S

11


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&st !#ASE OF DE ELO!MEN"

All ,e *mmendati*ns *2 the NSC Re+*,t1e,e a e+ted 5y the G*-e,nment. "he Islami %ankin0 %ill 1as +assed andthe I%A ame int* 2*, e *n 6th A+,il&7 (.C*nse uently8 the Islami 5ank 1asin *,+*,ated and * ially laun hed *n

uly &8 &7 (. "he esta5lishment *2 %IM% ma,ked ane1 milest*ne 2*, the de-el*+ment *2

the Islami /nan ial system in Malaysia.


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LEGISLA"ION OF "#E ISLAMIC %ANKING AC" &7 (

"* ena5le an Islami 5ank t* 5e esta5lished and*+e,ated in Malaysia8 a suita5le le0al 2,ame1*,ka *,din0 t* the Sha,iah +,in i+les sh*uld 5e +,*-ided.

"he eBistin0 %ankin0 A t &76( 8 did n*t *n2*,m 1ith the +,in i+les *2 Islami

5ankin0 5e ause H It ,e ui,ed all 5anks t* *+e,ate *n the 5asis *2 inte,est !,*hi5ited all ty+es *2 t,adin0

"he Islami %ankin0 A t &7 ( 1as le0islated inMa, h &7 ( +,*-ided %NM 1ith the +*1e, t* su+e,-iseand ,e0ulate Islami 5anks.I%A 1as the /,st a t t* +,*-ide the ne essa,yamendments t* all*1 Islami 5anks t* *+e,ate 1ith*utinte,est as 1ell as t* en0a0e in t,ade and *mme, e.


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"#E ES"A%LIS#MEN" AND DE ELO!MEN"OF %IM%

%IM% 1as in *,+*,ated as a +u5li limited *m+any t*ena5le the %ank t* *ndu t its a ti-iti s 2,eely 1ith*ut5ein0 *nst,ained 5y ,e0ulati*ns im+*sed *n statut*,y5*dies.E-en th*u0h %IM% 1as a +,i-ate *m+any8 the la,0est+*,ti*n *2 its sha,es sh*uld 5e held 5y the G*-e,nment t*0ene,ate the +u5li ;s *n/den e in the 5ank.%IM% 1as esta5lished 1ith the initial +aid3u+ a+ital *2RM ? milli*n *nsist *2 H Malaysian G*-e,nment RM(? milli*n

L)"# RM&? milli*n Muslim Wel2a,e O,0ani ati*n *2 Malaysia RM@ milli*n State Reli0i*us C*un ils RM'? milli*n State Reli0i*us A0en ies RM( milli*n Fede,al A0en ies RM&' milli*n


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"#E ES"A%LIS#MEN" AND DE ELO!MEN"OF %IM%

"he *,+*,ate *5=e ti-e *2 the %ank 1as t* +,*-ide5ankin0 2a ilities and se,-i es in a *,dan e 1ithIslami *mme, ial la1.In *,de, t* su+e,-ise its *+e,ati*ns t* ensu,e its

*m+lian e 1ith the +,in i+les *2 Sha,iah8 the %ankhad t* set u+ a Sha,iah Su+e,-is*,y C*un il.%IM% 1as listed *n the main 5*a,d *2 the KualaLum+u, St* k EB han0e *n &6 anua,y &77'A2te, '( yea,s in eBisten e8 %IM% has +,*-en that

Islami 5ankin0 is -ia5le and has dem*nst,ated itsa5ility and a+a ity t* *+e,ate in +a,allel 1ith

*n-enti*nal 5anks 1ith the 5ankin0 system.


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LEGISLA"ION OF GO ERNMEN" IN ES"MEN" AC"&7 (

%IM% 1as ,e ui,ed t* unde,take sh*,t3te,m in-estments8 as1ell as a 2und mana0ement measu,e t* meet its li uidity,e ui,ements +,es ,i5ed 5y %NM.

"he eBistin0 a-enue 2*, sh*,t3te,m in-estments 1as 5y 1ay*2 +u, hases *2 G*-e,nment +a+e,s in the 2*,m *2 MalaysianG*-e,nment ",easu,y %ills


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ES"A%LIS#MEN" OF S$ARIKA" "AKAF)L MALA$SIA%ER#AD

"he NSC 1as *2 the -ie1 that the Islami 5ank 1as,es+*nsi5le in ensu,in0 the sa2ety and se u,ity *2 its *1nassets and se u,ities a0ainst l*ss8 dama0e anddest,u ti*n and ,e *mmended that an Islami Insu,an e

*m+any sh*uld 5e esta5lished "aka2ul A t 1e,e ena ted in &7 5ased *n the Insu,an eA t &76(8 1ith su h m*di/ ati*ns and amendments t*

*n2*,m 1ith the Sha,iah and taka2ul 5usiness +,a ti es. "he /,st Islami insu,an e *+e,at*, Sya,ikat I "aka2ulMalaysia Sdn. %hd.


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' nd !#ASE OF DE ELO!MEN"

"he 0*-e,nment de ided that 2*, the /,st &? yea,s the,esh*uld 5e *nly *ne Islami 5ank 5e2*,e esta5lishin0 *the,Islami 5anks.

"his de isi*n 1as t* ena5le %IM% t* 2* us *n the 0,*1th*2 Islami 5ankin0 and t* de-el*+ as many Islami

5ankin0 +,*du ts and se,-i es as +*ssi5le 1ith*ut any*m+etiti*n%y the mid *2 De em5e, &77(8 %IM% had de-el*+ed '&Islami 5ankin0 +,*du ts and inst,uments *-e,in0 a1ide a,ea *2 5ankin0 a ti-ities.

"he se *nd +hase *2 the de-el*+ment *2 Islami 5ankin0sta,ted in ea,ly &77?s 1hen %NM *utlined *5=e ti-e t*de-el*+ a *m+,ehensi-e and -i5,ant Islami 5ankin0system *+e,atin0 side 5y side 1ith the *n-enti*nal5ankin0 system.


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' nd !#ASE OF DE ELO!MEN"

Du,in0 the /,st ten yea,s8 the de-el*+ment *2 Islami 5ankem+hasis *n ,eatin0 a la,0e num5e, *2 di e,ent ty+es *2 Islami/nan ial inst,uments.Alth*u0h %IM% 1as esta5lished in &7 (. the %ank 1as still n*ta5le t* se,-e the enti,e needs *2 the +*+ulati*n8 due t* se-e,al

*nst,ained *2 the limited num5e, *2 5,an hes and ,es*u, es.

"he esta5lishment *2 a la,0e num5e, *2 instituti*ns * e,in0Islami /nan ial se,-i es is ne essa,y t* 2u,the, de-el*+ Islami5ank. F*, this +u,+*se8 th,ee alte,nati-es 1e,e *nside,ed 5y theauth*,ityH Esta5lish ne1 Islami 5anks All*1 the *n-enti*nal 5anks t* set u+ Islami 5ankin0 su5sidia,ies All*1 the eBistin0 *n-enti*nal 5ankin0 system t* * e, Islami

5ankin0 se,-i es

A2te, a,e2ul *nside,ati*n8 the thi,d alte,nati-e 1as h*sen as it1as *nside,ed the m*st e ient and e e ti-e 1ay *2 eB+andin0Islami 5ankin0


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SKIM !ER%ANKAN "AN!A FAEDA#


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SKIM !ER%ANKAN "AN!A FAEDA#

"* *5se,-e a se+a,ate he ue lea,in0 system 2*, Islami 5ankin0. "* maintain se+a,ate led0e,s 2*, thei, Islami 5ankin0 *+e,ati*ns. "* a++*int at least *ne Sha,iah *nsultant t* ad-ise *n *+e,ati*ns *2

thei, Islami 5ankin0 di-isi*n.

"hese ,e ui,ements 1*uld ensu,e that the 5anks did n*t *3min0le the 2unds 2,eely 1ith*ut +,*+e, inte,nal *nt,*ls.


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SKIM !ER%ANKAN ISLAM

In &77 8 %NM ,e+la ed the S!"F 1ith Islami %ankin0 S heme *, kn*1n as Skim !e,5ankan Islam e e ti-e 2,*m &stDe em5e, &77 .All 5ankin0 instituti*ns +a,ti i+atin0 in the S!I 1e,e ,e ui,ed t*u+0,ade thei, Islami %ankin0 )nit t* Islami %ankin0Di-isi*n and headed 5y a Muslim seni*, mana0ement * e,

*2 the 5ank and ,e+*,ts t* the Chie2 EBe uti-e O e, "he minimum 2unds *2 Islami 5ankin0 1e,e ,aised 2,*m RM &milli*n t*H RM@ milli*n 2*, *mme, ial 5anks8 0,adually in ,eased t* RM'? milli*n

5y (& De em5e, '??? RM@ milli*n 2*, /nan e *m+anies8 0,adually in ,eased t* RMI? milli*n

5y (& De em5e, '??? RM( milli*n 2*, me, hant 5anks8 0,adually in ,eased t* RM: milli*n 5y

(& De em5e, '???.

%e0innin0 2,*m anua,y &7778 dis *unt h*uses 1e,e +e,mitted t*+a,ti i+ate in the S!I.


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ISLAMIC IN"ER3%ANK MONE$ MARKE"

"he esta5lishment *2 the Islami m*ney ma,ket *n ( anua,y &77 1as the last element 2*, the Islami 5ankin0system t* 2un ti*n as a 2ull34ed0ed 5ankin0 system.%NM de ided t* im+lement the Islami M*ney Ma,ket5ased *n the *n e+t *2 mudha,a5ah *, +,*/t3 sha,in0

"he de-el*+ment *2 an Islami m*ney ma,ket 1as ,u ialas an essential a-enue t* +,*-ide a ,eady s*u, e *2 sh*,t3te,m in-estment 5ased *n Sha,iah +,in i+les in ase *2tem+*,a,y sh*,ta0e *, su,+lus *2 2unds 2a ed 5y Islami5anks.

"he Islami m*ney ma,ket *m+,ised ( *m+*nentsH ",adin0 *2 Islami Finan ial Inst,uments Muda,a5ah Inte,5ank In-estments Islami Che ue Clea,in0 System


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ISLAMIC CA!I"AL MARKE"

Islami a+ital ma,ket is *ne *2 the *m+*nents in the*-e,all a+ital ma,ket in the *unt,y.It 2un ti*ns as a +a,allel ma,ket t* the *n-enti*nal a+italma,ket 2*, a+ital seeke,s and +,*-ide,s8 and +lays a

*m+lementa,y ,*le t* the Islami 5ankin0 system in5,*adenin0 and dee+enin0 the Islami /nan ial ma,kets inMalaysia.

"he 0*-e,nment esta5lished the Se u,ities C*mmissi*n as the s*le ,e0ulat*,y 5*dy 2*, the ,e0ulati*n andde-el*+ment *2 a+ital ma,ket *n & Ma, h &77(.SC has identi/ed the de-el*+ment *2 ICM as *ne *2 its maina0enda in the Ca+ital Ma,ket Maste,+lan *2Malaysia8 laun hed *n '' Fe5,ua,y '??&.One *2 the main *5=e ti-es set 5y the CMM! 1as t* esta5lishMalaysia as an Inte,nati*nal Islami Ca+ital Ma,ket Cent,e.


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"he SC;s e *,ts t* de-el*+ the ICM 5y settin0 u+ *2the ne essa,y in2,ast,u tu,eH Esta5lishin0 an Islami Ca+ital Ma,ket )nit

t* a,,y *ut ,esea, h and de-el*+ment *2 ICM inst,umentsanaly in0 the eBistin0 se u,ities 2,*m Sha,iah +e,s+e ti-es

Esta5lishin0 Islami Inst,uments Study G,*u+ t* ad-ise the SC *n de-el*+ment ICMt* study issues ,elated t* the *+e,ati*n *2 the ICM

Esta5lishin0 Sha,iah Ad-is*,y C*un il *2 SCsu eeded the ,*le and 2un ti*n *2 IISGt* ensu,e that the *+e,ati*n *2 the ICM *n2*,m t* Sha,iah+,in i+lest* ad-ise the SC *n all matte,s ,elated t* the de-el*+ment *2the Islami a+ital ma,ketas a ,e2e,en e ente, 2*, issues ,elated t* Islami a+ital ma,ket.


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"he SC;s e *,ts t* de-el*+ the ICM 5y 5,*adenin0 andst,en0then the ma,ket su h asH Analy in0 eBistin0 *n-enti*nal a+ital ma,ket inst,uments

t* dete,mine its -alidity 2,*m the Sha,iah +e,s+e ti-e8 F*,mulatin0 and de-el*+in0 ne1 /nan ial inst,uments 5ased

*n Sha,iah +,in i+les Re-ie1in0 and identi2yin0 the a ti-ities *m+anies listed *n

the KLSE 2*, the issuin0 *2 the Sha,iah a++,*-ed *unte, list.

"he ICM *m+,ises H !,ima,y ma,ket

Ne1 issues *2 Islami G*-e,nment se u,ities and the IslamiC*,+*,ate se u,ities a,e * e,ed t* the +u5li

Se *nda,y ma,ket8EBistin0 Islami G*-e,nment se u,ities and Islami C*,+*,atese u,ities a,e t,aded the e uity ma,ket and the unit t,ust.

$ )


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S#ARIA# AD ISOR$ CO)NCIL OF "#E %NM

%NM esta5lished its Sha,iah Ad-is*,y C*un il *nIslami %ankin0 and "aka2ul *n & May &776 t* st,eamlineand ha,m*nise the Sha,iah inte,+,etati*ns am*n0 5anksand taka2ul *m+anies.

"he SAC t**k *-e, the ,*le *2 SAC *2 %ank Islam as the*nsultant t* the I%S 5anks +e,tainin0 t* Sha,iah issues.

!,i*, t* the esta5lishment *2 SAC8 the,e 1e,e s*medi e,en es in *+ini*n am*n0 Sha,iah *nsultants *n simila,issues 1hi h mi0ht *5st,u t the de-el*+ment *2 I%S.

"he SAC is the hi0hest auth*,ity in de idin0 Sha,iah issues+e,tainin0 t* Islami 5ankin0 and taka2ul *+e,ati*ns inMalaysia.Mem5e,s *2 SAC *m+,ise a ademi ians and Sha,iaheB+e,ts 1h* +*sses -ast kn*1led0e and eB+e,ien e in thea,eas *2 Islami 5ankin0 and /nan e.

S#ARIA# AD ISOR$ CO)NCIL SAC OF


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S#ARIA# AD ISOR$ CO)NCIL OF "#E %NM

"he +,ima,y *5=e ti-es *2 NSAC a,e as2*ll*1sH "* a t as the s*le auth*,itati-e 5*dy t*

ad-ise %NM *n Islami 5ankin0 and taka2ul

*+e,ati*ns "* *3*,dinate Sha,iah issues 1ith ,es+e t

t* Islami 5ankin08 /nan e and taka2ul "* analy e and e-aluate Sha,iah as+e ts

*2 ne1 +,*du ts s hemes su5mitted 5ythe 5ankin0 instituti*ns and taka2ul

*m+anies.

ES"A%LIS#MEN" OF "#E SECOND ISLAMIC


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ES"A%LIS#MEN" OF "#E SECOND ISLAMIC%ANK

"he se *nd Islami 5ank in Malaysia8 %ank MuamalatMalaysia %e,had 1as esta5lished *n &O t*5e, &777.

"he esta5lishment *2 %MM% a,*se 2,*m the me,0e, *2%ank %umi+ut,a Malaysia %e,had and %ank *2

C*mme, e %e,had .)nde, the me,0e, a,,an0ement8 the Islami 5ankin0assets and lia5ilities *2 %%M%8 %OC and %%M%Ke1an0an %e,had 1e,e t,ans2e,,ed in%MM%8 1hile the *n-enti*nal *+e,ati*ns *2 %%M%8%OC% and %M%K 1e,e t,ans2e,,ed t* %OC%.

"he esta5lishment *2 the se *nd Islami 5ank has*nt,i5uted t* the ,a+id 0,*1th *2 the Islami 5ankin0

system.

DE ELO!MEN" FINANCIAL INS"I")"IONS


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DE ELO!MEN" FINANCIAL INS"I")"IONS

"he as+i,ati*n *2 %NM t* de-el*+ a*m+,ehensi-e Islami 5ankin0 systemhad stimulated the n*n35ankin0/nan ial inte,media,ies t* * e, Islami5ankin0 +,*du ts and se,-i es in ludesH %ank Sim+anan Nasi*nal %ank Ke,=asama Rakyat Malaysia

De-el*+ment Finan e Instituti*ns i.e. %ank !em5an0unan dan In2,ast,uktu,Malaysia and %ank !e,tanianMalaysia .


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( ,d !#ASE OF DE ELO!MEN"

With the ,a+id de-el*+ment *2 the Islami/nan ial indust,y *n the 0l*5al 2,*nt8 theG*-e,nment has +,*m*ted Malaysia as a ,e0i*nalIslami /nan ial ent,e.

"he 0*-e,nment has de la,ed La5uan as anInte,nati*nal O sh*,e Finan ial Cent,e t*+,*m*te Malaysia as an inte,nati*nal Islami/nan ial ent,e.%NM has +a,ti i+ated a ti-ely t* enhan e the

de-el*+ment *2 Islami 5ankin0 and /nan e su has the 2*,mati*n *2 an Inte,nati*nal IslamiFinan ial Ma,ket and the settin0 u+ *2 theIslami Finan ial Se,-i es %*a,d .


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LA%)AN AS AN ISLAMIC IOFC

G*-e,nment has made a de isi*n t* +,*m*te La5uan asan Inte,nati*nal O sh*,e Finan ial Cent,e t*+*siti*n itsel2 as an inte,nati*nal ente, 2*, * sh*,eIslami 5ankin0 and /nan e 1ith the *5=e ti-esH "* *m+lement d*mesti /nan ial a ti-ities in Kuala Lum+u, "* st,en0then the *nt,i5uti*n *2 the /nan ial se,-i es

se t*, in the 0,*ss nati*nal +,*du t *2 Malaysia "* +,*m*te the e *n*mi de-el*+ment *2 La5uan

La5uan 1ith the status *2 IOFC has the ad-anta0e t*att,a t inte,nati*nal 5ankin0 5usiness 5yH

,edu in0 *, eliminatin0 the need 2*, 2ull *m+lian e 1ithl* al a+ital ,e ui,ements ha-in0 l*1e, li en e 2ees8 *,+*,ate taBes and *the,

5usiness le-ies

IN"ERNA"IONA#SLAMIC FINANCIAL


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IN"ERNA"IONA#SLAMIC FINANCIALMARKE"

La5uan O sh*,e Finan ial Se,-i es Auth*,ity 1asesta5lished and ,es+*nsi5le 2*, settin0 nati*nal *5=e ti-es8+*li ies and +,i*,ities 2*, the de-el*+ment and administ,ati*n*2 * sh*,e /nan ial se,-i es in La5uan.In its e *,ts t* de-el*+ La5uan as an Islami IOFC8 LOFSA1*,ked 1ith Islami s h*la,s t* identi2y +*tential * sh*,ea ti-ities as 1ell as t* de-el*+ -ia5le Islami /nan ialinst,uments 1hi h 1*uld att,a t Islami in-est*,s t* theLa5uanF*ll*1in0 this8 Malaysia8 %ah,ain8 Ind*nesia8 Sudan8 I,an andthe Islami De-el*+ment %ank esta5lished an IIFM

%*a,d A+,il '??' "he IIFM %*a,d 1as ent,usted t* de-el*+ and su+e,-ise thede-el*+ment *2 the IIFM and su++*,ted 5y t1* *mmittees8the Ma,ket and !,*du t De-el*+ment C*mmittee M!DC andthe Sha,iah Su+e,-is*,y C*mmittee .

IN"ERNA"IONA#SLAMIC FINANCIAL


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IN"ERNA"IONA#SLAMIC FINANCIALMARKE"

LOFSA initiated the esta5lishment *2 a 0l*5alnet1*,k *2 Islami /nan ial ma,kets kn*1n asInte,nati*nal Islami Finan ial Ma,ket 1ith the*5=e ti-esH "* esta5lish a st,u tu,ed 0l*5al /nan ial ma,ket that is

5ased *n Sha,iah +,in i+les "* enhan e the **+e,ati-e 2,ame1*,k am*n0 Islami

*unt,ies and /nan ial instituti*ns "* 0ene,ate the li uidity8 ,eati*n and t,adin0 *2

/nan ial inst,uments8 thus enhan in0 in-estment

*++*,tunities and s+ins3* *2 *the, ,elated se,-i es anda ti-ities su h as ust*dial8 5,*ke,a0e and t,easu,y.

"* +,*m*te 0,eate, a1a,eness *2 Islami 5ankin0 and/nan e8 and 2a ilitate ,*ss 5*,de, t,ansa ti*ns.

FIRS" SO EREIGN GLO%AL ISLAMIC


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FIRS SO EREIGN GLO%AL ISLAMICS)K)K

Malaysia su ess2ully laun hed the /,stS*-e,ei0n Gl*5al Islami Sukuk8st,u tu,ed *n the +,in i+le *2 i=a,ah *n'@ une '??'.

"he laun hin0 *2 the 0l*5al Islami5*nd si0ni/ed Malaysia;s st,*n0

*mmitment in su++*,tin0 the

de-el*+ment *2 Islami 5ankin0 and/nan e *n the 0l*5al 2,*nt. "he m*-e t* a ess the inte,nati*nalIslami a+ital ma,ket 1*uld 0i-eim+etus t* the de-el*+ment *2 the

ISLAMIC FINANCIAL SER ICES %OARD


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ISLAMIC FINANCIAL SER ICES %OARD

Islami Finan ial Se,-i es %*a,d 1as esta5lished in'??'.

"he esta5lishment *2 the IFS% 1ill set the sta0e 2*, theada+tati*n8 ha,m*ni ati*n and de-el*+ment *2 theinte,nati*nal ,e0ulat*,y and su+e,-is*,y standa,ds as 1ellas 5est +,a ti es 2*, the 0*-e,nan e *2 all /nan ialinstituti*ns * e,in0 Islami /nan ial se,-i es and +,*du ts.

"he nine 2*undin0 mem5e,s a,e %ah,ain8 Ind*nesia8 I,an8Ku1ait8 Malaysia8 !akistan8 Saudi A,a5ia8 Sudan and theIslami De-el*+ment %ank8 "he IFS% se ,eta,iat is l* atedin Kuala Lum+u,. Malaysia.

"he %*a,d 1ill als* *nt,i5ute t*1a,ds ensu,in0 thes*undness and sta5ility *2 the Islami /nan ial system8thus +a-in0 the 1ay 2*, Islami 5ankin0 t* eB+and 0l*5ally.

LICENSING OF FOREIGN ISLAMIC %ANKS AND


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LICENSING OF FOREIGN ISLAMIC %ANKS ANDISLAMIC %ANKS S)%SIDIARIES

"he /nan ial li5e,ati*n *2 the Islami 5ankin0 se t*, 1asint,*du ed *n '??6 1ith the issuan e *2 th,ee ne1 Islami5ank li enses unde, the Islami %ankin0 A t &7 (

"he ne1 ent,ies *2 the 2*,ei0n Islami 5anks 1e,e in line1ith the ,e *mmendati*ns *2 the Finan ial Se t*, Maste,+lan t* +*siti*n Malaysia as an inte,nati*nalIslami /nan ial hu5.

"he +,esen e *2 2*,ei0n +laye,s 1ill +,*m*te healthy*m+etiti*n 1hi h is ne essa,y t* ele-ate the indust,y t*

ne1 le-els *2 dynamism as 1ell as t* a ele,ate the 0l*5alinte0,ati*n the d*mesti Islami 5ankin0 system.It 1ill als* +,*m*te 0,eate, e *n*mi and /nan iallinka0es 5et1een Malaysia and the Middle East8 and 2*ste,0,eate, ha,m*ni ati*n in te,ms *2 Sha,iah inte,+,etati*nand unde,standin0.

LICENSING OF FOREIGN ISLAMIC %ANKS AND


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LICENSING OF FOREIGN ISLAMIC %ANKS ANDISLAMIC %ANKS S)%SIDIARIES

In '?? 8 %NM als* *ntinued t* 2u,the, st,en0thenthe *-e,all in2,ast,u tu,e de-el*+ment *2 the Islami5ankin0 system as the Islami 5ankin0 indust,yente,ed a m*,e ad-an ed sta0e *2 de-el*+ment.

"he 1ind*135ased; instituti*nal st,u tu,e 1as

,e-ie1ed t* 2u,the, st,en0then and ele-ate thede-el*+ment *2 d*mesti Islami 5ankin0 indust,yth,*u0h a ne1 ena5lin0 instituti*nal st,u tu,e.

"he d*mesti 5ankin0 0,*u+s and 2*,ei0n Islami%ankin0 S heme 5anks 1e,e en *u,a0ed t*set u+ Islami su5sidia,ies as 2ull34ed0ed Islami5anks 1hi h 1*uld 5e li ensed unde, the I%A.

FINANCIAL SEC"OR MAS"ER !ELAN FOR ISLAMIC


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FINANCIAL SEC"OR MAS"ER !ELAN FOR ISLAMIC%ANKING

Finan ial Se t*, Maste, !elan 1as laun hed *nMa, h '??& in *,+*,ates &? yea,s maste, +lan2*, Islami 5ankin0 aFSM!;s aim is t* ,eate an e ient8 +,*0,essi-eand *m+,ehensi-e Islami /nan ial system that

*nt,i5utes si0ni/ antly t* the e e ti-eness ande ien y *2 then Malaysian /nan ial se t*,.FSM! +,*-ides ,e *mmendati*ns 1hi h 2* us *nth,ee main a,easH instituti*nal a+a ity enhan ement /nan ial in2,ast,u tu,e de-el*+ment ,e0ulat*,y 2,ame1*,k de-el*+ment

ISION OF ISLAMIC %ANKING AND


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ISION OF ISLAMIC %ANKING AND "AKAF)L

C*nstitute '? *2 the 5ankin0 and insu,an e ma,ket sha,e1ith an e e ti-e *nt,i5uti*n t* the /nan ial se t*, *2 theMalaysian e *n*myRe+,esented 5y a num5e, *2 st,*n0 and hi0hly a+itali edI%Is and taka2ul *+e,at*,s * e,in0 a *m+,ehensi-e and

*m+lete ,an0e *2 Islami /nan ial +,*du ts and se,-i es)nde,+inned 5y a *m+,ehensi-e and *ndu i-e Sha,iahand ,e0ulat*,y 2,ame1*,kSu++*,ted 5y a dedi ated instituti*n in the =udi ia,y system that add,esses le0al issues,elated t* Islami 5ankin0 and taka2ulSu++*,ted 5y a su ient num5e, *2 1ell3t,ained8 hi0h

ali5e, indi-iduals and mana0ement teams 1ith the ,e ui,edeB+e,tiseMalaysia as a ,e0i*nal Islami /nan ial ente,.


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CONCL)SION

Islami 5ankin0 system has eB+e,ien ed a ,a+id 0,*1thand t,emend*us de-el*+ment sin e its /,st de5ut in&7 (

a,i*us measu,es ha-e 5een ad*+ted 5y the auth*,itiesin im+lementin0 the Islami 5ankin0 system 1ith a ste+

5y ste+ and *+en3minded a++,*a h 1ith ea h ste+taken a2te, a,e2ul *nside,ati*n *2 all im+li ati*ns.In *,de, t* he a -ia5le Islami 5ankin0 system8 all the5asi elements t*1a,ds this +u,+*se 1e,e 5ein0esta5lished 5y the auth*,ity.

"hese in lude a la,0e num5e, *2 +,*du ts8 inst,umentsand instituti*ns and the esta5lishment *2 an Islamim*ney and a+ital ma,ket 1hi h 1*uld link theinstituti*ns and the inst,uments.


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