BNM issues Policy Document on Shariah Governance

Bank Negara Malaysia has issued the Policy Document on Shariah Governance (“Policy Document”). 
 
The Policy Document applies to –
 
  • Licensed Islamic banks;
  • Licensed takaful operators including professional retakaful operators;
  • Licensed banks and licensed investment banks approved to carry on Islamic banking business;
  • Prescribed development financial institutions approved to carry on Islamic financial business; and
  • Shariah committee members.
According to Bank Negara, the Policy Document sets out strengthened expectations for effective Shariah governance arrangements, specifically in respect of oversight accountabilities on the board of directors, Shahriah committee and other key organs involved in the implementation of Shahriah governance.
 
The Policy Document sets out, inter alia, the key responsibilities and expectations of the board of directors, the Shahriah Committee and the senior management of Islamic financial institutions.
 
The Policy Document is to be read with the documents listed in paragraph 6.1 and supersedes those listed in paragraph 7.1.
 
The Policy Document comes into effect on 1 April 2020 except for paragraph 12.5 (which imposes a nine-year limit on the tenure of office of a Shahriah committee member in any Islamic financial institution) which comes into effect on 1 April 2023.