Abstract
The Islamic Financial Services Act (IFSA) 2013 is a Malaysian banking law which was enacted to regulate and supervise the banking practices of Islamic finance institutions. IFSA 2013 has the effect of repealing the Islamic Banking Act 1983 (IBA), the Takaful Act 1984, the Payment System Act 2003 and the Exchange Control Act 1953. Prior to the introduction of IFSA 2013 there was no clear distinction between deposit and investment accounts. The IFSA 2013 re-defines Islamic deposit, and classifies investment accounts as non-principal guaranteed while deposit account as principal guaranteed. The objective of this paper is thus to explore implications of IFSA 2013 on investment accounts from the perspective of the banker. Future research could explore the perspective of account holders looking at their views on investment accounts and IFSA 2013.
Highlights
The rise of the Islamic banking and finance sector has lead to growing concern about diligence of Shariah compliance at Islamic financial institutions
This paper aims to explore the implications of Islamic Financial Services Act 2013 (IFSA) 2013 for investment accounts offered by Islamic financial institutions in Malaysia, by exploring the perspective of Islamic bankers and examining relevant guidelines and policy documents issued by Bank Negara Malaysia
Data from the questionnaire show that the introduction of IFSA 2013 is crucial to the growth and development of Islamic finance industry in Malaysia
Summary
The rise of the Islamic banking and finance sector has lead to growing concern about diligence of Shariah compliance at Islamic financial institutions. The central bank of Malaysia, Bank Negara Malaysia, has made tremendous efforts in promoting Shariah governance. These include the establishment of the Shariah Advisory Council as the highest Shariah authority in Islamic finance in Malaysia and the introduction of the Shariah Governance Framework in 2010 and a policy document on Shariah Governance in 2019. In the context of Islamic banking and finance, the enabling law provides provisions that enable the operation of Islamic banking and takaful, such as the Islamic Financial Services Act 2013 (IFSA), the Central Bank of Malaysia Act (CBMA) 2009, the Government Funding Act 1983 and the Development Financial Institution Act 2002. Some examples include the Hire Purchase Act (1967), the Rules of Court (2012), the Stamp Act (1949) and the Sales of Goods Act (1979) among others
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