Compliance with Shariah requirement 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 to establish sound 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 contract application in Islamic financial products and services. This policy is envisaged to strengthen legal certainty and Shariah compliance practices by an Islamic financial institution.
Hibah is a benevolent contract for the unilateral transfer of ownership of an asset, hereinafter referred to as a hibah asset, from a donor to a recipient without any consideration. In the context of Islamic financial transaction, hibah may be arranged with other Shariah contracts or concepts, namely ijarah, mudarabah, musyarakah, wakalah and qard, referred to as hibah arrangements in Part B. An Islamic financial institution may grant hibah to its customer at its own discretion but subject to conditions specified by Shariah requirements.
In the case of a family takaful certificate and a personal accident takaful certificate effected by a takaful participant upon his life providing for the payment of takaful benefits upon his death, a takaful participant may nominate an individual to receive takaful benefits upon his death under the takaful certificate as a beneficiary under a conditional hibah, if the takaful participant wishes to do so in accordance with the requirements in Schedule 10 of the Islamic Financial Services Act 2013 (IFSA).
This policy document aims to–
(a) provide reference on the Shariah rulings applicable to hibah;
(b) set out key operational requirements for the implementation of hibah; 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 hibah in Part B; and
(b) regulatory and supervisory expectations for the operational requirements on governance and oversight, documentation, risk management, as well as business and market conduct 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
