Bank Negara governor: Islamic finance key segment in financial system

Gavernor Bank Negara Malaysia Datuk Muhammad Ibrahim during his speach at the launching of Edicators Manual on Shariah Standard Murabahah at Lanai Kijang in Kuala Lumpur on August 15, 2016.ROHAIZAT MD DARUS/STAR.

KUALA LUMPUR: Islamic banking assets made up 27% of the total banking system, surpassing Bank Negara’s Financial Sector Masterplan, said governor Datuk Muhammad Ibrahim (pic).

He said that there were 27 takaful players offering more than 100 financial products now compared with fewer than four Islamic banks and takaful players before year 2000.

“Islamic finance in the country has become a key segment in the financial system. What was once a novelty is now mainstream.

“This is a consequence of continuous initiatives to build a solid foundation, focusing on infrastructural, institutional and capacity building measures, as well as robust regulatory and supervisory framework,” Muhammad said in his speech at the launch of the Educator’s Manual (EM) on Shariah Standard Murabahah.

The penetration rate for takaful now stood at 14.8% of the population, indicating growing acceptance of takaful products, he added.

On the global front, he said that Malaysia was positioned at the forefront of international developments in Islamic finance, with increasing connectivity between financial centres and more cross-border Islamic financial transactions.

“Our sukuk market constitutes more than 50% of global sukuk outstanding for the past 16 years,” said Muhammad.

On the launch of the EM, Muhammad said that the manual was aimed to act as a comprehensive teaching guide to enhance the Islamic finance syllabus by educational establishments.

The EM is an inaugural initiative by the central bank to publish syariah standards and practical operational standards as teaching materials for students, which include practical case studies from the Islamic finance industry.

It was jointly developed by Bank Negara in collaboration with the International Shari’ah Research Academy for Islamic Finance and IBFIM.

Universiti Sains Islam Malaysia and Universiti Islam Antarabangsa Malaysia would be the pilot partners to adopt the EM.

“The launch is a major initiative, the development of a syariah standard that is integrated with details on operational requirement.

“This approach ensures a transparent basis of syariah rulings by the Shariah Advisory Council, and provides a convergent in understanding between Shariah scholars and practitioners.

“In judiciary matters, where the SAC serves as a reference point in analysing muamalat cases, the court can also draw on these comprehensive and transparent syariah standards as basis in arriving at a court ruling,” he said.

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