What is the act or regulation governing Islamic banks in Malaysia?

Currently all IFIs are regulated by BNM under the purview of the Islamic Banking and Takaful Division. Bank Negara Malaysia was established on 26 January 1959 under the Central Bank of Malaysia Act (CBMA 1958). The Act has been repealed by Central Bank of Malaysia Act 2009 (effective 25 November 2009).

What is the regulation relating to bank in Malaysia?

1. What is the legal framework for banking regulation? The Financial Services Act 2013 (FSA) is the key statute governing the conventional finance industry. It replaced the Banking and Financial Services Act 1989, the Insurance Act 1996, the Payment Systems Act 2003 and the Exchange Control Act 1953.

What is Islamic Banking Act?

Islamic banking refers to a system of banking that complies with Islamic law also known as Shariah law. The underlying principles that govern Islamic banking are mutual risk and profit sharing between parties, the assurance of fairness for all and that transactions are based on an underlying business activity or asset.

What is the main act governing Islamic banking businesses?

The main legislation governing Islamic banking and insurance (takaful) is the IFSA. The IFSA imposes an express obligation on a licensed institution to ensure at all times that its aims and operations, business, affairs and activities are in compliance with shariah.

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Who regulates Malaysian banks?


  • Central Bank of Malaysia Act 1958 (Revised 1994) …
  • Banking and Financial Institutions Act 1989 (BAFIA) …
  • Exchange Control Act 1953. …
  • Islamic Banking Act 1983. …
  • Insurance Act 1996. …
  • Takaful Act 1984. …
  • Emergency (Essential Powers) Act, 1979. …
  • Loan (Local) Ordinance, 1959.

What will happen to a customer if he/she issued a bad Cheque?

Each time a a bad cheque is issued, it is treated as a bad cheque incident. The drawee bank will issue you a warning letter for each bad cheque incident. … The drawee bank will report your name to the Credit Bureau. The drawee bank will take the necessary steps to close your current account.

How safe are Malaysian banks?

Malaysian banks are pretty safe but

Whether it may be diversification for the banks you are banking with or the type of products that you choose or even your type of investments, diversification helps to protect your finances in the event of an economic downturn.

Is Islamic banking really different?

Islamic banking is at a cross-road today. While it has come up with products that are Shariah compliant, however its contribution to the society or ‘real economy’ is almost the same as conventional banking. … The result: Two products with different underlying structures, but essentially the same client experience.

Is bank interest Haram in Islam?

“According to Islamic laws, the interest given by banks is ‘haraam’ (prohibited), it cannot be used. But the interest money can be given to the poor and disabled without any intention of sawab (reward).

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Who are the regulators of Islamic financial system?

The Islamic banks are regulated and supervised by Bank Negara Malaysia under the Islamic Banking Act 1983 (IBA), while the conventional banks participating in the Islamic Banking Scheme (IBS banks) are regulated under the Banking and Financial Institutions Act 1989 (BAFIA).

Why does regulation matter for Islamic financial institutions?

The role of regulation extends beyond ensuring stability and confidence in the financial system, as it is also a behavioral shaper of market players. The laws, standards, and guidelines issued are instrumental in creating an incentive structure for market players to behave in certain ways.

How is Islamic banking different from conventional banking?

One key difference is that conventional banks earn their money by charging interest and fees for services, whereas Islamic banks earn their money by profit and loss sharing, trading, leasing, charging fees for services rendered, and using other sharia contracts of exchange.

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