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Islamic Financial Services Act 2013 | |
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Parliament of Malaysia | |
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Citation | Act 759 |
Territorial extent | Throughout Malaysia |
Passed by | Dewan Rakyat |
Passed | 28 November 2012 |
Passed by | Dewan Negara |
Passed | 19 December 2012 |
Royal assent | 18 March 2013 |
Commenced | 22 March 2013 |
Effective | [30 June 2013, P.U. (B) 277/2013; [1] 1 January 2015, P.U. (B) 553/2014 [2] ] |
Legislative history | |
First chamber: Dewan Rakyat | |
Bill title | Islamic Financial Services Bill 2012 |
Bill citation | D.R. 41/2012 |
Introduced by | Awang Adek Hussin, Deputy Minister of Finance |
First reading | 22 November 2012 |
Second reading | 27 November 2012 |
Third reading | 28 November 2012 |
Second chamber: Dewan Negara | |
Bill title | Islamic Financial Services Bill 2012 |
Bill citation | D.R. 41/2012 |
Introduced by | Awang Adek Hussin, Deputy Minister of Finance |
First reading | 3 December 2012 |
Second reading | 19 December 2012 |
Third reading | 19 December 2012 |
Related legislation | |
Islamic Banking Act 1983 [Act 276] Takaful Act 1984 [Act 312] | |
Status: In force |
The Islamic Financial Services Act 2013 (Malay : Akta Perkhidmatan Kewangan Islam 2013), is a Malaysian law which enacted to provide for the regulation and supervision of Islamic financial institutions, payment systems and other relevant entities and the oversight of the Islamic money market and Islamic foreign exchange market to promote financial stability and compliance with Shariah and for related, consequential or incidental matters.
The Islamic Financial Services Act 2013, in its current form (22 March 2013), consists of 18 Parts containing 291 sections and 16 schedules (including no amendment).
Islamic banking, Islamic finance, or Sharia-compliant finance is banking or financing activity that complies with Sharia and its practical application through the development of Islamic economics. Some of the modes of Islamic banking/finance include Mudarabah, Wadiah (safekeeping), Musharaka, Murabahah (cost-plus), and Ijara (leasing).
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Sukuk is the Arabic name for financial certificates, also commonly referred to as "sharia compliant" bonds. Sukuk are defined by the AAOIFI as "securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets." The Fiqh academy of the OIC legitimized the use of sukuk in February 1988.
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A Sharia Board certifies Islamic financial products as being Sharia-compliant. Because compliance with Sharia law is the underlying reason for the existence of Islamic finance, Islamic banks should establish a Sharia Supervisory Board (SSB) to advise them on whether their products comply, and to ensure that their operations and activities comply with Sharia principles. There are also national Sharia boards in many Muslim majority countries that regulate Islamic financial institutions nationwide.
Banking or banking activity that complies with Sharia —known as Islamic banking and finance, or Sharia-compliant finance—has its own products, services and contracts that differ from conventional banking. Some of these include Mudharabah, Wadiah (safekeeping), Musharakah, Murabahah, Ijar (leasing), Hawala, Takaful, and Sukuk.
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The Malaysia International Islamic Financial Centre (MIFC) is an initiative of Malaysia’s financial market regulators and relevant government agencies dedicated to developing Malaysia’s Islamic finance market by engaging with industry and government. The initiative was launched in 2006 and is based in Kuala Lumpur, Malaysia.
Rusni Hassan currently is a Professor and Dean at IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia. Previously, she was a Deputy Dean at the Institute, a Coordinator for Research and Publication and Course Coordinator for Islamic Law of Transactions and Islamic Banking and Takaful. She was a Research Committee for Review of Islamic Banking Laws, Central Bank of Malaysia and an examiner for Financial Planner Association of Malaysia. Presently she is the examiner for the Chartered Institute of Management Accountants. She was a member of Shariah Advisory Council Bank Negara Malaysia and Shariah Advisor for Association of Islamic Banking Institutions Malaysia. She also served as Secretary for the Association of Shariah Advisors in Islamic Finance Malaysia for 8 years starting from 2012 until 2020.
The Financial Services Act 2013, is a Malaysian laws which enacted to provide for the regulation and supervision of financial institutions, payment systems and other relevant entities and the oversight of the money market and foreign exchange market to promote financial stability and for related, consequential or incidental matters.
The Islamic banking and finance movement that developed in the late 20th century as part of the revival of Islamic identity sought to create an alternative to conventional banking that complied with sharia (Islamic) law. Following sharia it banned from its practices riba (usury) – which it defined as any interest paid on all loans of money – and involvement in haram (forbidden) goods or services such as pork or alcohol. It also forbids gambling (maisir) and excessive risk.
Islamic banking and finance — the industry built around avoiding interest and other financial practices found in violation of sharia — has been both praised and criticized by observers.