Malaysia proposes revisions to Islamic banking regulations

The central bank is inviting feedback to its exposure draft, until 31 March.

Malaysia’s central bank has published an exposure draft for proposed regulatory changes to its guidelines in Islamic banking.

Bank Negara Malaysia (BNM) is inviting written feedback to the shared draft.

First introduced in 1993, the Islamic Banking Window (IBW) framework allows conventional financial institutions to conduct Islamic banking operations with appropriate legal and regulatory standards to ensure compliance with Shariah. 

The IBW has since contributed to the steady growth of Islamic banking in Malaysia and enabled business opportunities in markets abroad to be explored by Malaysian Islamic financial institutions, the BNM said.

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“A review of the Guidelines on Skim Perbankan Islam (SPI Guidelines) was undertaken to reflect authorisation, prudential and operational regulatory requirements applicable to domestic and overseas IBWs based on relevant changes in legislative and regulatory requirements,” the central bank stated in the draft. 

“The revisions outlined in this policy document also aims to ensure comprehensive coverage of players including prescribed institutions under the Development Financial Institutions Act 2002 (DFIA),” BNM added.

Feedback for the exposure draft must be submitted electronically to BNM by 31 March 2024 to haq@bnm.gov.my