Sistem Perbankan Islam dalam membentuk

MBA4013
Semester I, Session 2006/2007

Management of Banking and
Takaful Institutions
Lecture 1: Introduction of the
Malaysian Islamic Financial System
Lecturer:
Mr. Abdullaah Jalil
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Lecture Outlines
 Malaysian

Financial System
 Islamic Financial System
 Malaysian Islamic Financial System

 History and Development of the (Malaysian)
Islamic Banking System
 Flows of Funds (A Perspective)

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Malaysian Financial System
Markets

Players

Regulators

Instruments

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Malaysian Financial System
MARKETS

Money & Forex Markets

Capital Markets

Money Market

Equity Market

Interbank Money
Market

Bond Market

Forex

-Private DS
BNM

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-Public DS

SC

Derivatives Markets

Commodity
Futures
KLSE CI Futures
KLIBOR Futures

MCC
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Offshore Markets

Labuan
International
Offshore
Financial
Centre (IOFC)

Commodities Trading
Commission
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Islamic Financial System
The basic principles of Islamic financial system
(Zamir Iqbal, n.d.):
1. Prohibition of riba
2. Risk sharing
3. Money as a “potential” capital
4. Prohibition of speculative behavior
5. Sanctity of contracts
6. Shariah-approved activities

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Islamic Financial System


Banking is the most developed part of the Islamic
financial system.



Banking systems to be fully compatible with Islamic
law. i.e. Iran, Pakistan & Sudan.



Islamic banking exists alongside
banking. E.g. Malaysia, Gulf Countris



Islamic banking is a part of the system.

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conventional

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Islamic Financial System
Conventionalplus

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Dual-financial
system

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Totally Islamic

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Islamic Financial System
Issues and challenges:

Islamic banking by itself cannot take root in the absence
of the other necessary components of an Islamic financial
system.

A uniform regulatory and legal framework is needed.

Establishing a single, sizable, and organized financial
center that functions in accordance with Islamic principles.

The pace of innovation is slow.

needs sound accounting procedures and standards.


There is lack of uniformity in the religious principles
applied in Islamic countries.
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Malaysian Islamic Financial System












Overview of Islamic Banking in Malaysia
Islamic Banking Concepts
List of Financial Institutions Offering Islamic Banking Services
Range of Islamic Banking Products and Services in Malaysia
The National Syari'ah Advisory Council
Government Investment Issues
Islamic Inter-bank Money Market
Islamic Banking Statistics
TAKAFUL
Overview of Takaful in Malaysia
Registered Takaful Operators
Takaful Key Statistics

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Go to:
www.bnm.gov.my

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Definition
Islamic Bank:
The Organisation of Islamic Conference (OIC): A financial institution whose
statutes, rules and procedures expressly state its commitment to the
principles of Islamic Shari’ah and to the banning of the receipt and
payment of interest on any of its operations.
Islamic Banking Act / 1983 of Malaysia: A company which carries on
Islamic banking business. Islamic banking means "banking business
whose aims and operations don't involve any element which is not
approved by the religion Islam.”
M. Aslam Saleemi: A financial institution which operates with the objective
of implementation of the economic and financial principles of Islamic
Shariah in the arena of banking.

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Definition
Islamic Windows:
Islamic windows are special facilities offered by conventional
banks to provide services to Muslims who wish to engage in
Islamic banking. (Zamir Iqbal)
In Malaysia: Islamic Banking Scheme (IBS) banks can be
defined as a conventional bank that participates in Islamic
banking operations. (Saiful Azhar Rosly)
The conventional banks than have divisions dedicated to
Islamic financial services. (www.econresearch.com)
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History and Development
of the (Malaysian) Islamic
Banking System

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The Development of Malaysian
Islamic Banking
1983

Enactment of:
(1) Islamic Banking Act 1983
(2) Government Investment Act 1983 (now replaced with
Government Investment Issues - GIIs)

July
1983

The establishment of Bank Islam Malaysia Berhad (BIMB)
as the first Islamic bank in Malaysia

Jan
1992

BIMB was listed on the main board of the Kuala Lumpur
Stock Exchange with 80 branches and 1,200 employees
throughout the country.

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Dual Banking System
1990 BNM Governor outlined BNM’s vision to create a
comprehensive financial system side-by-side with
conventional financial system – was further refined
to reflect profound changes in the banking system
Dual Banking System

VISION STATEMENT IN 1990
To create a comprehensive Islamic financial
system side-by-side with the conventional
financial system.
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Dual Banking System
BNM decided to allow the existing banking institutions to offer
Islamic banking services using their existing infrastructure and
branches.
4
BNM introduced a scheme known as "Skim Perbankan
March Tanpa Faedah“/ SPTF on a pilot basis involving 3 banks.
1993
July
1993

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Following the successful implementation of the pilot-run,
BNM opened the scheme to the commercial banks,
finance companies, and merchant banks subject to
specific guidelines.

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Dual Banking System
4 Jan
1994

To link the institutions and the instruments, the Islamic
Interbank Money Market (IIMM) was introduced.

Oct
1996

BNM issued a model financial statement for the banking
institutions participating in the SPI requiring the banks to
disclose the Islamic banking operations (balance sheet and
profit and loss account) as an additional item under the
Notes to the Accounts.

1998

As part of the overall review on Islamic banking, the usage
of the term SPTF was revisited and it was found that the
term did not portray the right appearance with respect to
the Islamic banking operations undertaken by the banks.

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Dual Banking System
1 Dec
1998

Thus, BNM replaced the SPTF with SPI/IBS (Skim
Perbankan Islam/Islamic Banking Scheme).

1998

BNM also observed that the IB operations of the SPI was
regarded as low hierarchy business, being manned by
middle-level management, while the IBU was given limited
functions to perform its duties and responsibilities
effectively. The existing organisation structure, scope, and
responsibilities of the IBU was reviewed and enhanced
further by introducing a new framework as follows:
IBU was up-graded to an Islamic Banking Division (IBD): onestop centre for all IB operations such as retail, commercial,
corporate, and trade/international bankings, treasury operations,
corporate planning, product development, and etc.


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Dual Banking System
IBD is required to prepare a strategic plan.
 IBD is expected to have a constructive relationship with other
departments/division and should be provided with the necessary
support from the departments/divisions in ensuring smooth
implementation of IB operations.
 IBD should be proficient in applying accounting standards
(including IB accounting standards), legal and regulatory
requirements, directives and guidelines issued by BNM or other
relevant banking associations.
 IBD as a division operates like “a bank within a bank”.
 IBD shall be headed by a Muslim senior management officer…
of the bank, at least the level of the Assistant General Manager
(AGM). The position of the AGM should be equivalent to the
status of other key functional heads to enable him to deal
effectively with his peers and superiors. Importantly, the AGM
should be functionally responsible to the Chief Executive Officer


2 Jan
1999

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Dual Banking System

1 Jan
2001

May
2003

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(CEO). Initially, the AGM is allowed to carry out banking duties
and responsibilities other than Islamic banking during an interim
period of 2 years (1999-2000).
Beginning 1 January 2001, the AGM shall perform his duties and
responsibilities with regard to Islamic banking on full-time basis.

Islamic Banking System:
 Total assets: RM73.4 billion; Deposits: RM55.2 billion;
Financing: RM41.3 billion.
 Institutions offering IB: 2 Islamic banks, 13 commercial
banks, 9 finance companies, 4 merchant banks, and 7
discount houses.
 2,065 Islamic banking counters and 138 banking outlets.

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Dual Banking System
2005

BNM approved the transformation of “Islamic windows”
institutional structure of seven domestic banking
groups into Islamic subsidiaries (IS)

August
2005

The first foreign Islamic bank commenced operations
in August 2005 while the other two foreign Islamic
banks would commence operations later in 2006.

Feb
2006

The IFSB issued two standards: CAS and Guiding
Principles

2006

The launch of INCEIF (International Centre for
Education in Islamic Finance)

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Dual Banking System

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Current Situation
1. Full-fledged

2. Islamic windows

BIMB, Bank Muamalat

i

3. Full-fledged
Islamic subsidiary
(IS)

c

c

i
i

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Flows of Funds (A Perspective)

Depositors
Islamic Bonds
(Investors)
Riba-free Loan

Islamic
Financial
Institutions

Islamic Instruments

Shareholders

Uses of Funds
Islamic Instruments

Sources of Funds

Islamic Funds

Islamic Capital Markets
Islamic Money Markets
Islamic Derivatives
Shariah-Compliant
Financing
Zakat/Sadaqah/Waqf
Others – Compulsory
Deposits

Retained Earning
DOMESTIC MARKETS

INTERNATIONAL MARKETS
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Topics for Discussions in the Tutorial
Classes


What are the impact of financial liberalization on
Malaysian Islamic banking system? (Group)



Find out: What are the current issues in the
Malaysian Islamic Financial System? (Group)



What are the sources of information for you to keep
up-dated with the current issues of Islamic banking
industry? (Group)

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Suggested Additional References
 www.bnm.gov.my
 BNM

Annual Report 2005
 Zamir Iqbal – Islamic Financial Systems
(worldbank)

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Q & A Session

‫شكرا جزيل على حضوركم‬
‫وحسن استماعكم‬
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‫إلى هذه المحاضرة‬
‫المتواضعة‬

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