Rapid growth in Islamic finance in recent years is pushing up demand for more experts in the field, with the Financial Accreditation Agency (FAA) identifying five key areas in which specialists are urgently needed.
However, programmes offered by local universities now are too generic and provide only a broad-based education on Islamic finance, noted FAA chief executive Dr Amat Taap Mashor in an interview with The Edge Financial Daily.
The industry and its future growth, at the very least, require experts that are specialised in compliance, risk management, governance, audit and the syariah principles guiding all these areas of expertise, he said.
“What is needed now are specialised areas of studies. Currently, if someone wants to specialise in risk management for Islamic finance, the [local] universities might offer only one class on risk management. How is the student supposed to develop the depth of knowledge needed [in] Islamic finance?
“Without a depth of knowledge in syariah principles, how can you design a syariah-compliant product?” asked Amat.
Bank Negara Malaysia is issuing two concept papers on Ijarah and Istisna' for public consultation. The concept paper aims to seek feedback from members of the public, Islamic financial institutions and related stakeholders on the Shariah and operational requirements for the application of ijarah and istisna' contracts.
Background
As part of the initiatives to strengthen the Shariah-compliance practices among Islamic financial institutions (IFIs), Bank Negara Malaysia is developing a Shariah-based regulatory policy with the objective to provide a comprehensive guidance to the lslamic financial industry to enhance end-to-end compliance with Shariah and therefore, ensure the integrity and sustainability of the IFI.
Islamic banks are required to reclassify their deposits into Islamic deposits and investment accounts under the Islamic Financial Services Act 2013 (IFSA). To do so, they are given a two-year transition period until June 30, 2015. Bank Negara Malaysia (BNM) said Islamic banking institutions will engage with their customers in providing information and clarification on the differences between the Islamic deposit and investment account products as well as the options available to them to either retain their placements in Islamic deposit or migrate to investment accounts. During the transition period, all lslamic deposits accepted under IBA will continue to be protected by Perbadanan Insurans Deposit Malaysia while the Islamic banks will also ensure that the customers' rights are protected.
Bank Negara Malaysia’s (BNM) recently announced concept paper on life insurance and family takaful (LI and FT) may be the insurance sector’s re-rating catalyst. The proposals made in the paper focus on ensuring sustainable operating costs, enhancing disclosure and improving policyholders’ value proposition, which should collectively boost penetration, especially in the mass market. Key measures in the recent proposals include the introduction of the minimum allocation rate to replace commission/operating cost limits on investment-linked products, promoting distribution channels and encouraging greater product transparency with enhanced disclosure requirements and web aggregators. The outcome is considered a win-win for customers and insurers.
BIMB Holdings Bhd announced it has notified Bank Negara Malaysia that the security for its proposed sukuk will only comprise the legal assignment over the proceeds from the exercise of its proposed warrants. It includes the legal assignment and charge over a sinking fund account into which all proceeds from the exercise of the warrants will be deposited. The exchange has approved the listing of new shares, warrants and rights in relation to its proposed purchase of the remaining 49% stake in Bank Islam.
Bank Negara Malaysia (BNM) has extended the deadline for the negotiations among BIMB Holdings Bhd, Dubai Financial Group LLC and Lembaga Tabung Haji (LTH) over the Bank Islam Malaysia Bhd stake to July 31. Following the extensión of the deadline, a formal approval shall be sought for the proposed acquisition as mutually agreed among the parties. BIMB already owns 51% in Bank Islam. A 30.5% stake is with the Dubai Financial Group (DFG) while 18.5% is held by Lembaga Tabung Haji (LTH). BIMB is seeking to purchase LTH's stake in Bank Islam. LTH also owns a 51.5% stake in BIMB. BIMB may have to fork out RM2.7bil to own 100% of its unlisted banking unit Bank Islam.
Malaysian's central bank governor has claimd that Islamic finance will contribute to the global agenda of developing sustainable growth. Providing financial services that add value to the real economy is the focal point of Islamic finance and tenets.
Tan Sri Dr Zeti Akhtar Aziz - governor of Bank Negara Malaysia - recently announced that the legislative process for the new legal framework for Islamic banking and takaful to be enacted is progressing. Not only will the new framework streamline the legal requirements across sectors but it is also expected to make sure that the law was reflective of the nature and features of Shariah contracts. Moreover, this way the degree of regulation would commensurate with level of risks that Islamic financial institutions, markets and products pose to the overall financial sytem.
According to Tan Sri Dr Zeti Akhtar Aziz, governor of Bank Negara Malaysia (BNM), Socially responsible investment (SRI) will appeal significantly to Islamic finance. In particular, the recent global financial crisis has played an important role. He further explains that apart from financial returns, SRI accords primary consideration to the impact on economic activity and on the broader society as well. This way, the important dimensions of environmental sustainability, social responsibility and governance can be incorporated.
Malaysian Governor calls to a more balanced global economic growth. She claims that the Islamic finance must include lower income groups in order to ease the access of financial services to all segments of society.
According to CIMB Group Holdings Bhd and RHB Capital Bhd, the rally in ringgit-denominated Islamic bonds that pushed yields to an eight-month low will stop after the central bank ruled out a cut in interest rates.
After the interview with Bank Negara Malaysia Governor Zeti Akhtar Aziz, yields may rise.The governor noted that the benchmark policy rate of 3 percent is supportive of economic growth ahead of a March 9 review.
Overseas funds reduced holdings of local-currency government Islamic bonds by 11 percent in January to RM490 million (US$163 million), the least in a year.
Sarawak DAP has the strong oppinion that Bank Negara Malaysia must immediately investigate the practice of banks charging interests on loans under the Islamic banking principles as this is tantamount to borrowing money from loan sharks.
Chong Chieng Jen, party secretary, states that taking the Islamic banking principles into consideration, a borrower who defaults on his loan payment would be charged future interests on the period of the loan, if, for example, it is a 30-year loan.
AmTakaful has finally registered with Bank Negara Malaysia allowing it to start selling family Takaful products in the country.
Late last year The Islamic Globe reported on the signing of the shareholder’s agreement between Friends Life and AMMB Holdings.
The license for the JV was issued in 2010 after Malaysia’s 2009 announcement of the liberalization of its financial sector.
The governors of central banks and monetary authorities of the Organization of Islamic Cooperation (OIC) member countries are convening brought together for a meeting hosted by Bank Negara Malaysia, the central bank, at its plush new conference centre in Sasana Kijang in Kuala Lumpur.
The official theme of the meeting is “Central Banking and Financial Sector Development”. But is is inevitable that discussions will also concentrate on how the global financial crisis, the euro zone sovereign debt crisis and the fallout of the so-called “Arab Spring” are impacting on OIC member countries, and on some alternative solutions to deal with some of the impact of these developments.
Ahmad Hizzad Baharuddin is the new director general of the Labuan Financial Services Authority at Bank Negara Malaysia. He has been appointed to the role for a three year term, effective from October 3, 2011.
It seems that Malaysia's central bank is thinking about allowing a more flexible cap on foreign shareholdings in banks.
An unnamed source stated that Bank Negara Malaysia has been in talks with the country's financial services industry, to supply feedback for the government in drawing up its second 10-year Financial Sector Master Plan blueprint expected to be disclosed by the end of the year.
Alkhair International Islamic Bank Malaysia is asking approval from Bank Negara Malaysia to begin talks to obtain a Malaysian bank. The reason seems to be the fact that this will permit them to affirm into the ringgit business.
Alkhair International posesses a licence to carry out Islamic banking business in non-ringgit currencies.
Sarawak's Senari Synergy has launched an RM380m ($126m) 20-year Sukuk on August 2. Danajamin Nasional, a financial guarantee insurer owned by Malaysia's Ministry of Finance, Bank Negara Malaysia, and the country's commercial banks was the one that subscribed and underwrote it.
Central bankers from Malaysia, Indonesia have met in Jakarta on 18 July 2011 and discussed the need to improve cooperation in order to boost the development of Islamic finance in the two countries.
Governor Tan Sri Dr Zeti Akhtar Aziz of Bank Negara Malaysia and Governor Darmin Nasution of Bank Indonesia agreed on the need for joint initiatives to create an ‘enabling environment’.
Elaf Bank has been given a license by the Ministry of Finance Malaysia to open a branch office in Malaysia. The license was handed during a formal ceremony held at Bank Negara Malaysia.
The bank wants to start its branch office operations in Kuala Lumpur immediately, now that it has fulfilled the formalities required for obtaining the license.