The guidelines on Skim Perbankan Islam (‘SPI Guidelines’), first issued in 1993, allows conventional financial institutions to conduct Islamic banking operations within the appropriate legal and regulatory standards in compliance with Shariah. A number of such financial institutions have since contributed to the development of Islamic banking industry in Malaysia under the setup of Islamic banking windows (IBW) and enabled market opportunities to be explored through diverse institutional structures.
A review of the SPI Guidelines1 was undertaken to reflect the applicability of approval, Shariah, prudential and operational regulatory requirements to both domestic and overseas IBWs and ensure continued relevance of the IBW institutions in the current operating environment. The revisions outlined in this Policy Document on Islamic Banking Window (‘this Policy Document’) also aims to ensure comprehensive coverage of players including prescribed institutions under the Development Financial Institutions Act 2002 (‘DFIA’).
As this Policy Document supersedes the SPI Guidelines, any reference to the SPI Guidelines in other policy documents, guidelines or circulars issued by Bank Negara Malaysia (‘BNM’) and any reference to ‘SPI’ provided within such documents shall be construed as ‘this Policy Document’ and ‘IBW institutions’ accordingly.
This Policy Document specifies the following:
(a) scope of Islamic banking business or Islamic financial business that can be carried out by a licensed person under the Financial Services Act 2013 (‘FSA’) or a prescribed institution under the DFIA which has been approved to carry on such business respectively;
(b) submission and operational requirements to facilitate approvals under the FSA or DFIA for an IBW institution to carry on its IBW operations;
(c) relevant requirements to be complied with by an IBW institution to ensure that the IBW operations are in compliance with Shariah requirements at all times; and
(d) specific requirements that must be complied with in respect of IBW operations conducted by overseas branches of a licensed person or a prescribed institution.
This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking
