KUALA LUMPUR, June 20 (Bernama) -- The new legal framework for Islamic
banking and takaful, that will come into force this year, will pave the
way for the development of an end-to-end Shariah-compliant regulatory
framework for the conduct of Islamic financial operations, says Bank
Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz.
Source from (Bernama): http://www.bernama.com/bernama/v7/bu/newsbusiness.php?id=957539
Published: Jun 21, 2013
Source from (The Star Online): http://biz.thestar.com.my/news/story.asp?file=/2013/6/21/business/13268893&sec=business
Published: Jun 16, 2013
The new framework would provide clarity on the fundamental requirements
of Shariah that must be adhered to for the contractual arrangements
between the financial institution and the customer to remain
enforceable, she said.
"The framework also outlines the operational requirements for the
effective application of Shariah principles in the conduct of Islamic
financial institutions.
"This aims to strengthen the risk management practices beyond the
traditional credit, market and liquidity risks to also include inventory
risk, ownership risk and Shariah compliance risk," Zeti said at the
opening of the Brunei Darussalam Islamic Investment Summit 2013.
The text of her speech titled, "Regulatory and Governance For Islamic Finance", was made available here Thursday.
She said the legislation also provided for the resolution of Islamic
financial institutions to be in line with distinctive elements of the
relevant Islamic contracts, thus improving the legal and procedural
aspects for the orderly resolution of Islamic financial institutions.
On the Islamic finance development, Zeti said the new wave of
internationalisation for Islamic finance required increased
collaboration across jurisdictions to strengthen the international
financial infrastructure of Islamic finance.
"This is to ensure that the greater internationalisation of Islamic
finance takes place in an environment of financial stability," she
added.
At the national level, Zeti said the first priority relates to trend
for the domestic Islamic financial system to become more integrated,
allowing for risks to be rapidly transmittal, across the financial
system.
"This requires the development of enhanced regulatory, supervisory and
legal frameworks that are also adaptive and effective to the innovative
dynamics and unique mix of risks in Islamic finance," she said.
Zeti said the increased cross-border reach of Islamic finance has also
underscored the importance of enhanced cross-border collaboration among
the supervisory authorities.
"Information-sharing and effective coordination among supervisors will
enable a complete understanding of the entire risk spectrum of the risk
taking activities undertaken across jurisdictions by the Islamic
financial institutions," she added.
Another key area is the evolution of the legal framework for Islamic
finance to provide greater certainty and to build public confidence in
the system as a whole, said Zeti.
"This necessitates a legal framework that enforces end-to-end Shariah
compliance in the Islamic financial services industry - through
provisions and mechanisms that unambiguously define the conduct and
governance of Islamic financial institutions," she added.
Zeti also said with greater liberalisation, Islamic finance was
increasingly supporting regional and international trade and investment
flows, intermediating significant cross-border financial flows.
"With its internationalisation, Islamic finance has become an
increasingly more important channel for the efficient allocation of
Asia's surplus funds towards productive investments in the region," she
added.
Zeti also said efforts to strengthen the foundations for Islamic
finance to ensure its continued resilience, amid the more challenging
environment, must remain a priority going forward into the future.
"Indeed, our commitment to act guided by this foresight will strengthen
the prospect for Islamic finance to realise its potential in the region
and beyond," the governor added.
-- BERNAMA
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