(individually an “
IBW institution”) to carry on Islamic banking business or Islamic financial business in and outside Malaysia (“
IBW operations”) in addition to the overall conventional business of the IBW institution, excluding International Currency Business Unit. It is to be noted that a licensed investment bank that undertakes only fee-based Shariah compliant activities, e.g. conducting only lead arranging activities for
sukuk, will not be subject to the policy document when issued.
3
The Exposure Draft is an enhancement of the updated
Guidelines on Skim Perbankan Islam issued on 2 November 2012 and will supersede the latter upon the issuance of the policy document.
The Exposure Draft is divided into three main parts, namely:
Effective date
The policy document will come into effect on the date to be specified when the policy document is finalised.
28
Deadline for comments
The deadline for submission of responses to BNM on the Exposure Draft is
31 March 2024.
Comment
The Exposure Draft is timely as the policy document arising from it will update and supersede the Guidelines on Skim Perbankan Islam which were issued in 2012 before the enactment of the FSA and the IFSA in place of the Banking and Financial Institutions Act 1989 and the Islamic Banking Act 1983 respectively, and prior to the amendments to the DFIA in 2016
29 to permit prescribed institutions to carry on business or activity in accordance with Shariah.
Article by Sharifah Shafika Alsagoff (Partner) and Hafidah Aman Hashim (Partner) of the Islamic Finance Practice of Skrine.
1 Section 15 of the FSA,
inter alia, permits BNM to grant its written approval to licensed banks and licensed investment banks to carry on Islamic banking business, subject to the provisions set out in that section of the FSA.
2 Section 33B(1)(b) of the DFIA,
inter alia, permits a prescribed institution to carry on business or activity in accordance with Shariah in addition to its existing conventional business provided that it obtains the prior written approval of BNM, subject to the provisions set out in Part IIIA of the DFIA.
3 Paragraph 2.2 of the Exposure Draft.
4 Paragraphs 8.1 and 8.2 of the Exposure Draft.
5 Paragraph 8.3 of the Exposure Draft. This requirement does not apply to IBW operations by overseas branches.
6 Paragraph 8.4 of the Exposure Draft.
7 Paragraph 8.5 of the Exposure Draft. Refer to sub-paragraphs (a) to (c) of paragraph 8.5 for further details.
8 Paragraph 8.6 of the Exposure Draft.
9 Paragraphs 8.8 to 8.15 of the Exposure Draft.
10 Paragraph 8.16 of the Exposure Draft.
11 Paragraph 8.17 of the Exposure Draft.
12 Paragraphs 8.18 to 8.20 of the Exposure Draft.
13 Paragraphs 8.21 to 8.24 of the Exposure Draft.
14 Paragraph 8.25 of the Exposure Draft.
15 Paragraph 8.26 of the Exposure Draft.
16 Paragraph 9.1 of the Exposure Draft.
17 Paragraph 9.3 of the Exposure Draft.
18 Paragraph 9.4 of the Exposure Draft. Refer to paragraph 9.4 for further details.
19 Paragraph 9.5 of the Exposure Draft.
20 Paragraph 9.6 of the Exposure Draft.
21 Paragraphs 9.7 and 9.8 of the Exposure Draft.
22 Paragraph 10.1 of the Exposure Draft.
23 Paragraph 10.3 of the Exposure Draft.
24 Paragraph 10.4(a) of the Exposure Draft.
25 Paragraph 10.4(b) of the Exposure Draft.
26 Paragraph 10.5 of the Exposure Draft.
27 Paragraph 10.6 of the Exposure Draft.
28 Paragraph 4.1 of the Exposure Draft.
29 The amendments were introduced under the Development Financial Institutions (Amendment) Act 2015 which came into operation on 31 January 2016.