Compliance with Shariah requirements is a prerequisite in ensuring the legitimacy and integrity of Islamic financial products and services. In meeting this expectation, it is essential for an Islamic financial institution (IFI) to establish the necessary operational framework and infrastructure to ensure that its conduct of Islamic financial transactions is consistent with Shariah.
The Shariah contract-based regulatory policy is intended to promote consistency of Shariah contracts application in Islamic financial products and services. This policy is envisaged to strengthen legal certainty and Shariah compliance practices by an IFI.
This policy document aims to–
(a) provide reference on the Shariah rulings applicable to a rahn (collateral) contract;
(b) set out key operational requirements for the implementation of the rahn contract; and
(c) promote end-to-end compliance with Shariah requirements which further promote sound Islamic banking and takaful practices and safeguard consumer interests.
This policy document sets out the following:
(a) salient features and essential conditions of the rahn contract in Part B; and
(b) regulatory and supervisory expectations for the operational requirements on governance and oversight, structuring, risk management, business and market conduct as well as financial disclosure in Part C.
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
