This document discusses the development of the Malaysian Islamic financial system. It covers:
1) The historical development of Islamic banking in Malaysia, from the establishment of Lembaga Tabung Haji in 1963 to the passing of the Islamic Banking Act in 1983 which allowed the creation of Bank Islam Malaysia, the country's first Islamic bank.
2) The three phases of development - the first phase focused on establishing the necessary legal and regulatory framework; the second phase expanded the system to include more Islamic financial institutions; the third phase further developed Islamic capital markets.
3) Key milestones and regulations that helped grow the system, such as the Government Investment Act which allowed Shariah-compliant short-term
Development of Malaysia's Islamic Financial System
1. Mahyuddin Khalid
emkay@salam.uitm.edu.my
ISLAMIC FINANCIAL
LEGAL FRAMEWORK
DEVELOPMENT OF THE MALAYSIAN
ISLAMIC FINANCIAL SYSTEM
2. CONTENT
2
MALAYSIAN ISLAMIC FINANCIAL SYSTEM
HISTORICAL DEVELOPMENT OF ISLAMIC
BANKING
NSC REPORT ON BANK ISLAM MALAYSIA
1ST PHASE OF DEVELOPMENT
2ND PHASE OF DEVELOPMENT
3RD PHASE OF DEVELOPMENT
CONCLUSION
3. MALAYSIAN ISLAMIC FINANCIAL
3
SYSTEM
Comprehensive Islamic financial system covering all
financial sectors
operating in parallel with conventional financial system
Diversities of players
Twelve full-fledged Islamic banking institutions
2 domestic Islamic banks
3 full-fledged foreign owned Islamic banks
7 Islamic banking subsidiaries
9 takaful operators
Sound and robust Islamic financial institutions governed by
international best practices
Rapid growth with wide range of product and services
Retail, corporate & investment banking
Internationally integrated with international Islamic financial
system
4. HISTORICAL LANDMARKS IN ISLAMIC FINANCE
DEVELOPMENT
1963 • Mit Ghamr, Egypt
1969 • Pilgrims’ Fund Board (Lembaga Tabung Haji), Malaysia
1970 • Oil boom
• Islamic Development Bank, Saudi Arabia
1975 • Dubai Islamic Bank, UAE
• Fatwa issued by the Fiqh Council of Muslim World League in favour of Islamic insurance
1977 (takaful)
1978 • Luxembourg Islamic Bank (1st attempt in the West )
• Sudanese Islamic Insurance Company is established as the world’s 1st Takaful company by
1979 Faisal Islamic Bank of Sudan
1983 • Malaysia passes comprehensive legislation on Islamic finance (Islamic Banking Act)
• OIC Islamic Fiqh Academy legitimizes Sukuk which paves the way to the development of
1988 Islamic debt securities
1990 • World 1st sukuk issued in Malaysia (Based on BBA) by Shell MDS worth USD 30 million
1991 • AAOIFI , Bahrain
2002 • IFSB, Malaysia
2011 • International Islamic Liquidity Management (IILM), Malaysia
4
5. HISTORICAL DEVELOPMENT OF ISLAMIC
BANKING
5
Traditional Malay Muslim society is very cautious
in involving themselves in riba transactions
In order to avoid interest-based transactions in
getting cash or liquidity, they practice a local
customary transaction known as jual janji
(conditional sale).
The Courts recognize jual janji as a Malay
customary transaction arising out of religious
consideration
According to Ungku A. Aziz, the main purpose of
savings for Malay Muslims was to meet the
expenses for the journey to perform haj, thus
they preferred to use traditional ways of savings.
6. HISTORICAL DEVELOPMENT OF ISLAMIC
BANKING
6
In Malaysia, Islamic banking can be traced back
to its root in 1963, with the establishment of the
Lembaga Urusan dan Tabung Haji (LUTH), which
was the first Islamic savings institution for the
special purpose of performing hajj.
Islamic resurgence in the Middle Eastern
countries had initiated the call for the
establishment of an Islamic financial system that
would allow Muslims to practice their banking
and finance according to Shariah principles.
This can be seen with the establishment of
Islamic Development Bank in Jeddah in 1974
and Dubai Islamic Bank in 1975, being the first
Islamic commercial bank.
7. HISTORICAL DEVELOPMENT OF ISLAMIC
BANKING
7
Move towards establishing an Islamic bank in Malaysia was
initiated by various private parties
e.g during the Kongres Ekonomi Bumiputera (The Bumiputera
Economic Congress) in 1980 and at the National Seminar on
Konsep Pembangunan Dalain Islam (the Concept of
Development in Islam).
A resolution was passed calling off the Government to allow
LUTH to establish an Islamic hank in Malaysia in order to
mobilise and invest the funds of the Malays and the
Muslims.
Main factors contributing to the successful growth of Islamic
banking in this country:
Support and encouragement from the government
Commitment and dcdicat ion of the regulatory authority
Favourable economic environment
Creativity of the financial engineers in designing new products.
8. HISTORICAL DEVELOPMENT OF ISLAMIC
BANKING
8
LUTH undertook a study on the establishment of an Islamic
bank in Malaysia.
The government accepted the proposal by LUTH and
appointed a National Steering Committee on Islamic Bank
(NSC) to study various proposals for the establishment of an
Islamic bank.
The NSC was given the following tasks:
To study and identify various critical aspects of Islamic banking
such as the basis of the establishment, areas of operation and
business relationships with the customers and other financial
institutions.
To examine the suitability of Islamic banking in the Malaysian
context from various points of view including
religious, legal, racial, social and development; and
To present to the Government recommendations regarding the
establishment of ‘Bank Islam Malaysia’
9. NSC REPORT ON ‘BANK ISLAM
MALAYSIA’
9
An Islamic bank, which operates according to the rules of
Shariah, should be established; provide services and
operating profitably.
Only one Islamic bank should be established.
The proposed Islamic bank should be incorporated as a
limited company under the Companies Act 1965.
The Islamic Banking Act needs to be legislated in order to
provide for the licensing and supervision of the Islamic bank
The Central Bank should administer the Islamic Banking
Act.
The proposed Islamic bank should set up a Religious
Supervisory Council to supervise the compliance of its
operations with Shariah principles.
The proposed Islamic bank should be named ‘Bank Islam
Malaysia’.
10. STAGES OF DEVELOPMENT
10
Gradual and pragmatic
Milestones
1969 1983 1993 2003
Pilgrimage Fund Board
Full-fledged Bank Islam Bank Muamalat Foreign Islamic
Islamic banks Malaysia Bhd. Malaysia Bhd. banks
Conventional banks offer Islamic window
Islamic subsidiary
Islamic money markets
Takaful Syarikat Takaful Takaful Nasional, Mayban Takaful, Takaful
Operators Malaysia Bhd. Iklhas, Commerce Takaful
..achieved significant milestones in building comprehensive and integrated
Islamic financial system with diversity of players….
11. DEVELOPMENTAL FOCUS
Institutional & Regulatory
Development
Enhancement Product and
of knowledge market
and expertise development
Legal and Shariah framework
11
12. 1st PHASE OF DEVELOPMENT
12
All recommendations of the NSC Report were
accepted by the Government.
The Islamic Banking Bill was passed and the
IBA came into force on 7th April 1983.
Consequently, the Islamic bank was
incorporated and officially launched on July 1,
1983.
The establishment of BIMB marked a new
milestone for the development of the Islamic
financial system in Malaysia.
13. LEGISLATION OF THE ISLAMIC BANKING ACT (IBA)
1983
13
To enable an Islamic bank to be established and
operated in Malaysia, a suitable legal framework
according to the Shariah principles should be
provided.
The existing Banking Act 1973 (now replaced by
BAFIA 1989), did not conform with the principles of
Islamic banking because :
It required all banks to operate on the basis of interest
Prohibited all types of trading
The Islamic Banking Act (IBA) 1983 was legislated in
March 1983 provided BNM with the power to
supervise and regulate Islamic banks.
IBA was the first act to provide the necessary
amendments to allow Islamic banks to operate
without interest as well as to engage in trade and
commerce.
14. THE ESTABLISHMENT AND DEVELOPMENT
OF BIMB
14
BIMB was incorporated as a public limited company to
enable the Bank to conduct its activitics freely without being
constrained by regulations imposed on statutory bodies.
Even though BIMB was a private company, the largest
portion of its shares should be held by the Government to
generate the public’s confidence in the bank.
BIMB was established with the initial paid-up capital of
RM80 million consist of :
Malaysian Government RM30 million
LUTH RM10 million
Muslim Welfare Organization of Malaysia RM5 million
State Religious Councils RM20 million
State Religious Agencies RM3 million
Federal Agencies RM12 million
15. THE ESTABLISHMENT AND DEVELOPMENT
OF BIMB
15
The corporate objective of the Bank was to
provide banking facilities and services in
accordance with Islamic commercial law.
In order to supervise its operations to ensure its
compliance with the principles of Shariah, the
Bank had to set up a Shariah Supervisory
Council.
BIMB was listed on the main board of the Kuala
Lumpur Stock Exchange (KLSE) on 17 January
1992
After 23 years in existence, BIMB has proven
that Islamic banking is viable and has
demonstrated its ability and capacity to operate
in parallel with conventional banks with the
16. LEGISLATION OF GOVERNMENT INVESTMENT ACT
1983
16
BIMB was required to undertake short-term investments, as
well as a fund management measure to meet its liquidity
requirements prescribed by BNM.
The existing avenue for short-term investments was by way
of purchases of Government papers in the form of
Malaysian Government Treasury Bills (MGTB) and
Malaysian Government Securities (MGS) that bore interests
and BIMB could not invest in them.
The NSC proposed that the Government Investment Act
(GIA) be legislated to enable the Government to issue
Government Investment Certificates on the basis of Islamic
principles.
GIA provided the solution to the problem of acquiring
interest—free short-term investments which acted as an
instrument to absorb surplus funds in the short run, a
common problem faced by the Islamic Bank in the absence
of an Islamic money market.
17. ESTABLISHMENT OF SYARIKAT TAKAFUL MALAYSIA
BERHAD
17
The NSC was of the view that the Islamic bank was
responsible in ensuring the safety and security of its
own assets and securities against loss, damage and
destruction and recommended that an Islamic
Insurance company should be established
Takaful Act were enacted in 1984 based on the
Insurance Act 1973, with such modifications and
amendments to conform with the Shariah and takaful
business practices.
The first Islamic insurance operator Syarikat I Takaful
Malaysia Sdn. Bhd. (STMB) was incorporated in
November 1984 as a subsidiary of BIMB
With the establishment of STMB, other subsidiaries
like Syarikat Wakalah Sdn Bhd (providing nominee
and investment fund services for the bank) and Al-
Ijarah Sdn. Bhd.(providing leasing finance) were also
set up.
18. 2nd PHASE OF DEVELOPMENT
18
The government decided that for the first 10 years
there should be only one Islamic bank before
establishing other Islamic banks.
This decision was to enable BIMB to focus on the
growth of Islamic banking and to develop as many
Islamic banking products and services as possible
without any competition
By the mid of December 1993, BIMB had developed
21 Islamic banking products and instruments
covering a wide area of banking activities.
The second phase of the development of Islamic
banking started in early 1990s when BNM outlined
objective to develop a comprehensive and vibrant
Islamic banking system operating side by side with
the conventional banking system.
19. 2nd PHASE OF DEVELOPMENT
19
During the first ten years, the development of Islamic bank
emphasis on creating a large number of different types of
Islamic financial instruments.
Although BIMB was established in 1983. the Bank was still
not able to serve the entire needs of the population, due to
several constrained of the limited number of branches and
resources.
The establishment of a large number of institutions offering
Islamic financial services is necessary to further develop
Islamic bank. For this purpose, three alternatives were
considered by the authority:
Establish new Islamic banks
Allow the conventional banks to set up Islamic banking
subsidiaries
Allow the existing conventional banking system to offer Islamic
banking services
After careful consideration, the third alternative was chosen
as it was considered the most efficient and effective way of
expanding Islamic banking
20. SKIM PERBANKAN TANPA FAEDAH
20
(SPTF)
BNM introduced a scheme named Interest-Free
Banking Scheme (Skim Perbankan Tanpa Faedah)
(SPTF) in March 1993 to allow the existing
conventional banking system to offer Islamic banking
services
Through SPTF, conventional banks were allowed to
introduce and offer Islamic banking services and
facilities at their counters using their existing
infrastructure, including staff and branches.
By the end of end of June 1999, the number of
participating banking institutions increased
significantly to 54, comprising 24 commercial banks,
18 finance companies, 5 merchant banks and 7
discount houses
Although the participation of the banking institutions
was voluntary, they had to comply with the
requirements of the guidelines issued by BNM.
21. SKIM PERBANKAN TANPA FAEDAH
21
(SPTF)
BNM has introduced various measures and policies to meet
up the requirements:
To establish an Islamic Banking Unit (IBU) to be headed by a
senior Muslim banker
To create an Islamic Banking Fund (IBF) with the minimum
allocation of RM1 million
To open separate current/clearing accounts for Islamic banking
operations with BNM
To register as Indirect Members under the wholesale payments
system, SPEEDS (Sistem Pcmindahan Elektronik untuk Dana
dan Sekuriti) (now RENTAS)
To observe a separate cheque clearing system for Islamic
banking.
To maintain separate ledgers for their Islamic banking
operations.
To appoint at least one Shariah consultant to advise on
operations of their Islamic banking division.
These requirements would ensure that the banks did not co-
mingle the funds freely without proper internal controls.
22. SKIM PERBANKAN ISLAM (SPI)
22
In 1998, BNM replaced the SPTF with Islamic Banking Scheme
(IBS) or known as Skim Perbankan Islam (SPI) effective from 1st
December 1998.
All banking institutions participating in the SPI were required to
upgrade their Islamic Banking Unit (IBU) to Islamic Banking
Division (IBD) and headed by a Muslim senior management officer
of the bank and reports to the Chief Executive Officer (CEO)
The minimum funds of Islamic banking were raised from RM 1
million to:
RM5 million for commercial banks, gradually increased to RM20
million by 31 December 2000
RM5 million for finance companies, gradually increased to RMI0
million by 31 December 2000
RM3 million for merchant banks, gradually increased to RM6 million by
31 December 2000.
Beginning from 4 January 1999, discount houses were permitted
to participate in the SPI.
23. ISLAMIC INTER-BANK MONEY
23
MARKET
The establishment of the Islamic money market on 3
January 1994 was the last element for the Islamic
banking system to function as a full-fledged banking
system.
BNM decided to implement the Islamic Money
Market based on the concept of mudharabah or
profit- sharing
The development of an Islamic money market was
crucial as an essential avenue to provide a ready
source of short-term investment based on Shariah
principles in case of temporary shortage or surplus of
funds faced by Islamic banks.
The Islamic money market comprised 3 components:
Trading of Islamic Financial Instruments
Mudarabah Interbank Investments (MII)
Islamic Cheque Clearing System (ICCS)
24. ISLAMIC CAPITAL MARKET
24
Islamic capital market is one of the components in the
overall capital market in the country.
It functions as a parallel market to the conventional capital
market for capital seekers and providers, and plays a
complementary role to the Islamic banking system in
broadening and deepening the Islamic financial markets in
Malaysia.
The government established the Securities Commission
(SC) as the sole regulatory body for the regulation and
development of capital market on 1 March 1993.
SC has identified the development of ICM as one of its main
agenda in the Capital Market Masterplan (CMMP) of
Malaysia, launched on 22 February 2001.
One of the main objectives set by the CMMP was to
establish Malaysia as an International Islamic Capital
Market Centre.
25. ISLAMIC CAPITAL MARKET
25
The SC’s efforts to develop the ICM by setting up of
the necessary infrastructure:
Establishing an Islamic Capital Market Unit (ICMU)
to carry out research and development of ICM instruments
analyzing the existing securities from Shariah perspectives
Establishing Islamic Instruments Study Group (IISG)
to advise the SC on development ICM
to study issues related to the operation of the ICM
Establishing Shariah Advisory Council (SAC) of SC
succeeded the role and function of IISG
to ensure that the operation of the ICM conform to Shariah
principles
to advise the SC on all matters related to the development of
the Islamic capital market
as a reference center for issues related to Islamic capital
market.
26. ISLAMIC CAPITAL MARKET
26
The SC’s efforts to develop the ICM by broadening
and strengthen the market such as:
Analyzing existing conventional capital market
instruments to determine its validity from the Shariah
perspective,
Formulating and developing new financial instruments
based on Shariah principles
Reviewing and identifying the activities companies listed
on the KLSE for the issuing of the Shariah approved
counter list.
The ICM comprises :
Primary market
New issues of Islamic Government securities and the Islamic
Corporate securities are offered to the public
Secondary market,
Existing Islamic Government securities and Islamic
Corporate securities are traded; the equity market and the
unit trust.
27. SHARIAH ADVISORY COUNCIL (SAC) OF THE
BNM
27
BNM established its Shariah Advisory Council (SAC) on
Islamic Banking and Takaful on 1 May 1997 to streamline
and harmonise the Shariah interpretations among banks
and takaful companies.
The SAC took over the role of SAC of Bank Islam as the
consultant to the IBS banks pertaining to Shariah issues.
Prior to the establishment of SAC, there were some
differences in opinion among Shariah consultants on similar
issues which might obstruct the development of IBS.
The SAC is the highest authority in deciding Shariah issues
pertaining to Islamic banking and takaful operations in
Malaysia.
Members of SAC comprise academicians and Shariah
experts who posses vast knowledge and experience in the
areas of Islamic banking and finance.
28. SHARIAH ADVISORY COUNCIL (SAC) OF THE
BNM
28
The primary objectives of NSAC are as
follows:
To act as the sole authoritative body to advise
BNM on Islamic banking and takaful operations
To co-ordinate Shariah issues with respect to
Islamic banking, finance and takaful
To analyze and evaluate Shariah aspects of new
products/ schemes submitted by the banking
institutions and takaful companies.
29. ESTABLISHMENT OF THE SECOND ISLAMIC
BANK
29
The second Islamic bank in Malaysia, Bank
Muamalat Malaysia Berhad (BMMB) was
established on 1 October 1999.
The establishment of BMMB arose from the
merger of Bank Bumiputra Malaysia Berhad
(BBMB)and Bank of Commerce (M) Berhad
(BOC).
Under the merger arrangement, the Islamic
banking assets and liabilities of BBMB, BOC and
BBMB Kewangan Berhad (BBMBK) were
transferred in BMMB, while the conventional
operations of BBMB, BOCB and BMBK were
transferred to BOCB.
The establishment of the second Islamic bank
has contributed to the rapid growth of the Islamic
banking system.
30. DEVELOPMENT FINANCIAL INSTITUTIONS
(DFIS)
30
The aspiration of BNM to develop a
comprehensive Islamic banking system had
stimulated the non-banking financial
intermediaries to offer Islamic banking
products and services includes:
Bank Simpanan Nasional (BSN)
Bank Kerjasama Rakyat Malaysia (BR)
Development Finance Institutions (DFIs) i.e.
Bank Pembangunan dan Infrastruktur Malaysia
(BPIM) and Bank Pertanian Malaysia (BPM).
31. 3rd PHASE OF DEVELOPMENT
31
With the rapid development of the Islamic
financial industry on the global front, the
Government has promoted Malaysia as a
regional Islamic financial centre.
The government has declared Labuan as an
International Offshore Financial Centre (IOFC) to
promote Malaysia as an international Islamic
financial centre.
BNM has participated actively to enhance the
development of Islamic banking and finance such
as the formation of an International Islamic
Financial Market (IIFM) and the setting up of the
Islamic Financial Services Board (IFSB).
32. LABUAN AS AN ISLAMIC IOFC
32
Government has made a decision to promote
Labuan as an International Offshore Financial Centre
(IOFC) to position itself as an international center for
offshore Islamic banking and finance with the
objectives:
To complement domestic financial activities in Kuala
Lumpur
To strengthen the contribution of the financial services
sector in the gross national product of Malaysia
To promote the economic development of Labuan
Labuan with the status of IOFC has the advantage to
attract international banking business by:
reducing or eliminating the need for full compliance with
local capital requirements
having lower licence fees, corporate taxes and other
business levies
33. INTERNATIONAHSLAMIC FINANCIAL MARKET
(IIFM)
33
Labuan Offshore Financial Services Authority (LOFSA) was
established and responsible for setting national objectives,
policies and priorities for the development and
administration of offshore financial services in Labuan.
In its efforts to develop Labuan as an Islamic IOFC, LOFSA
worked with Islamic scholars to identify potential offshore
activities as well as to develop viable Islamic financial
instruments which would attract Islamic investors to the
Labuan
Following this, Malaysia, Bahrain, Indonesia, Sudan, Iran
and the Islamic Development Bank (IDB) established an
IIFM Board April 2002
The IIFM Board was entrusted to develop and supervise the
development of the IIFM and supported by two committees,
the Market and Product Development Committee MPDC
and the Shariah Supervisory Committee (SSC).
34. INTERNATIONAHSLAMIC FINANCIAL MARKET
(IIFM)
34
LOFSA initiated the establishment of a global
network of Islamic financial markets known as
International Islamic Financial Market (IIFM) with
the objectives:
To establish a structured global financial market that
is based on Shariah principles
To enhance the cooperative framework among
Islamic countries and financial institutions
To generate the liquidity, creation and trading of
financial instruments, thus enhancing investment
opportunities and spins-off of other related services
and activities such as custodial, brokerage and
treasury.
To promote greater awareness of Islamic banking
and finance, and facilitate cross border transactions.
35. FIRST SOVEREIGN GLOBAL ISLAMIC
SUKUK
35
Malaysia successfully launched the first
Sovereign Global Islamic Sukuk, structured
on the principle of ijarah on 25 June 2002.
The launching of the global Islamic bond
signified Malaysia’s strong commitment in
supporting the development of Islamic
banking and finance on the global front.
The move to access the international Islamic
capital market would give impetus to the
development of the Islamic financial market.
36. ISLAMIC FINANCIAL SERVICES BOARD
(IFSB)
36
Islamic Financial Services Board (IFSB) was
established in 2002.
The establishment of the IFSB will set the stage for
the adaptation, harmonization and development of
the international regulatory and supervisory
standards as well as best practices for the
governance of all financial institutions offering Islamic
financial services and products.
The nine founding members are
Bahrain, Indonesia, Iran, Kuwait, Malaysia, Pakistan,
Saudi Arabia, Sudan and the Islamic Development
Bank, The IFSB secretariat is located in Kuala
Lumpur. Malaysia.
The Board will also contribute towards ensuring the
soundness and stability of the Islamic financial
system, thus paving the way for Islamic banking to
expand globally.
37. LICENSING OF FOREIGN ISLAMIC BANKS AND
ISLAMIC BANKS SUBSIDIARIES
37
The financial liberation of the Islamic banking sector
was introduced on 2007 with the issuance of three
new Islamic bank licenses under the Islamic Banking
Act 1983 (IBA)
The new entries of the foreign Islamic banks were in
line with the recommendations of the Financial
Sector Master plan (FCMP) to position Malaysia as
an international Islamic financial hub.
The presence of foreign players will promote healthy
competition which is necessary to elevate the
industry to new levels of dynamism as well as to
accelerate the global integration the domestic Islamic
banking system.
It will also promote greater economic and financial
linkages between Malaysia and the Middle East, and
foster greater harmonization in terms of Shariah
interpretation and understanding.
38. LICENSING OF FOREIGN ISLAMIC BANKS AND
ISLAMIC BANKS SUBSIDIARIES
38
In 2004, BNM also continued to further
strengthen the overall infrastructure development
of the Islamic banking system as the Islamic
banking industry entered a more advanced stage
of development.
The window-based’ institutional structure was
reviewed to further strengthen and elevate the
development of domestic Islamic banking
industry through a new enabling institutional
structure.
The domestic banking groups and foreign Islamic
Banking Scheme (IBS) banks were encouraged
to set up Islamic subsidiaries (IS) as full-fledged
Islamic banks which would be licensed under the
39. FINANCIAL SECTOR MASTER PELAN FOR ISLAMIC
BANKING
39
Financial Sector Master Pelan was launched on
March 2001 incorporates 10 years master plan
for Islamic banking a
FSMP’s aim is to create an efficient, progressive
and comprehensive Islamic financial system that
contributes significantly to the effectiveness and
efficiency of then Malaysian financial sector.
FSMP provides recommendations which focus
on three main areas:
institutional capacity enhancement
financial infrastructure development
regulatory framework development
40. VISION OF ISLAMIC BANKING AND
TAKAFUL
40
Constitute 20% of the banking and insurance market share
with an effective contribution to the financial sector of the
Malaysian economy
Represented by a number of strong and highly capitalized
IBIs and takaful operators offering a comprehensive and
complete range of Islamic financial products and services
Underpinned by a comprehensive and conducive Shariah
and regulatory framework;
Supported by a dedicated institution (Shariah commercial
court) in the judiciary system that addresses legal issues
related to Islamic banking and takaful
Supported by a sufficient number of well-trained, high
caliber individuals and management teams with the required
expertise;
Malaysia as a regional Islamic financial center.
41. CONCLUSION
41
Islamic banking system has experienced a rapid
growth and tremendous development since its first
debut in 1983
Various measures have been adopted by the
authorities in implementing the Islamic banking
system with a step by step and open-minded
approach with each step taken after careful
consideration of all implications.
In order to he a viable Islamic banking system, all the
basic elements towards this purpose were being
established by the authority.
These include a large number of
products, instruments and institutions and the
establishment of an Islamic money and capital
market which would link the institutions and the