MALAYSIA: With less than
eight months before the mandatory reclassification of Islamic deposit
products by Shariah banks as stipulated by the Islamic Financial Services
Act (IFSA) 2013, the Securities Commission Malaysia (SC) has urged Bank
Negara Malaysia to expedite the approval of proposed deposit and
investment products, to grant Islamic banks a smoother transition.
“The market players are hoping to get the approval from the central bank
as soon as possible so that they can move their plans forward and introduce
the new IFSA-based products to customers,” said SC Shariah advisor
Professor Madya Aznan Hassan when addressing the media on the sidelines
of an Islamic finance event in Kuala Lumpur. Although ready for the June
2015 deadline, Aznan elaborated that a speedy approval process is still
essential: “We need to put things into structure, the mechanism, audit
and observation before going to the market.”
Enforced on the 30th June 2013, IFSA 2013 dictated the clear
distinction and separation of all existing Islamic deposits under current
accounts, savings accounts and term deposits which utilize Mudarabah and
Wakalah contracts, to be classified as investment accounts, and not
deposit accounts as before. This new requirement was designed to enhance
Shariah compliance of products through the emphasis of risk-sharing and
to distinguish Islamic products from conventional instruments. The new
regulation however has raised some concerns on the product development
front but speaking to veteran industry players, IFN has learned that
while there may be concerns, developing new products should not pose a
huge obstacle as such products are already widely available in the GCC
region and could serve as a guide for the Malaysian market.
2015 could prove an exciting year for the Malaysian Islamic finance and
banking industry as the government embarks on a series of initiatives
engineered to boost the sector further. Aside from the IFSA 2013, the
country’s budget for next year includes various measures targeted
specifically for Shariah compliant finance (See IFN Report Vol. 11 Issue
41). One of them is the introduction of a new Shariah compliant
investment platform known as Investment Account Platform, which will act
as a central marketplace to fund SMEs. The government has committed RM150
million (US$44.84 million) to initiate the project, which is expected to
stimulate equity-based products as well as instruments more in line with
the concept of risk-sharing.
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