Bank Negara issues Policy Document on Hajah and Darurah
26 January 2024
Bank Negara Malaysia (‘
BNM’) issued the policy document on
Hajah and Darurah (‘
policy document’) on 3 January 2024.
1
The policy document applies to:
- licensed Islamic banks;
- licensed takaful operators and professional retakaful operators;
- licensed banks and licensed investment banks approved to carry on Islamic banking business; and
- prescribed development financial institutions approved to carry on Islamic financial business,
(collectively ‘
IFIs’).
The policy document will come into effect on
2 January 2025 save for the requirement for IFIs to submit their respective implementation plans to comply with the policy document to Jabatan Sistem Kewangan Islam of BNM by 30 April 2024.
2
In essence, the policy document clarifies the parameters for the application of
hajah (need) and
darurah (dire necessity) in Islamic financial business and it also sets out the Shariah and operational requirements and expectations for the application of
hajah (need) and
darurah (dire necessity) by IFIs in carrying out Islamic banking and takaful business.
3
The policy document sets out the Shariah and operational requirements and expectations of BNM concerning the application of
hajah and
darurah. Among others, the policy document:
- outlines the parameters of hajah and darurah for the application of exceptional rules;
- clarifies and strengthens the accountability of individuals responsible for the assessment, deduction as well as implementation of hajah and darurah; and
- outlines the operational requirements and guidance in facilitating Shariah deliberation and decision-making on the application of hajah and darurah.
Comments
The policy document focuses on
fiqhiyyah4 (jurisprudential) perspective of hardship and introduces the concept of
hajah (need) type 1,
hajah (need) type 2 and
darurah (dire necessity) and will be welcomed as it provides clarity and guidance to IFIs in determining the circumstances in which
hajah and
darurah can be applied in Islamic financial business in accordance with Shariah.
The policy document further provides that the application of
hajah (need) and
darurah (dire necessity) from the
usuliyyah5 (fundamental) perspective is not subject to the requirements under the policy document as such
usuliyyah (fundamental) perspective of hardship is allowed permanently by the Shariah to address public needs and does not require further deduction by the Shariah committee of the IFI or the BNM Shariah Advisory Council (SAC).
To provide clarification on the requirements of the policy document, a set of
Frequently Asked Questions (FAQs) was issued by BNM simultaneously with the issuance of the policy document.
Alert by Sharifah Shafika Alsagoff (Partner) and Hafidah Aman Hashim (Partner) of the Islamic Finance Practice of Skrine.
1 The policy document was preceded by a discussion paper in late 2021 followed by an exposure draft issued on 15 January 2022. The policy document is substantially similar to the exposure draft except for the introduction of new paragraphs 12.19 to 12.21 (
application of hajah type 2 and darurah) and paragraphs 13.1 to 13.3 (
requirements relating to the implementation plan).
2 Paragraph 12.22 of the policy document.
3 Refer to section 1 and Appendix 1 of the policy document for a discussion on the terms ‘
hajah’ and ‘
darurah’.
4 Fiqhiyyah means a circumstance faced by a scholar where it requires a new deduction of a Shariah requirement on the application of
hajah and
darurah, and its permissibility of the period and quantum will be determined based on the severity of hardships faced by the people.
5 Usuliyyah (fundamental) perspective of need (
hajah) and dire necessity (
darurah) means a circumstance faced by a scholar where there is an established Shariah principle on the application of
hajah and
darurah and it has been allowed permanently by the Shariah (see paragraphs 1.6 and 1.8 of the policy document).
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.