Kuala Lumpur, Malaysia (PRWEB) September 15, 2009
Bank Negara Malaysia is pleased to announce the issuance of the Shariah Parameter Reference 1 or Murabahah Parameter (SPR1) to all Islamic financial institutions under the purview of Bank Negara Malaysia. SPR1 is the first in a series of Shariah Parameters to be issued as guidance and reference to all Islamic financial institutions. Other Shariah Parameters currently being developed are Ijarah, Mudarabah, Musharakah, Istisna' and Wadiah. The SPR1 has been endorsed by Bank Negara Malaysia's Shariah Advisory Council and marks a key advancement in the Bank's efforts to promote greater harmonization and in the development of the Islamic finance industry.
The Shariah Parameters initiative aims to define the essential features of Islamic financial products and services based on the underlying Shariah contracts that are endorsed by the Shariah boards and adopted by Islamic financial institutions. The issuance of Shariah Parameters as standard documents will facilitate comprehensive understanding of the principles and the basis for adopting Shariah contracts. The other objectives of the parameters include:-
i) To clarify the concepts, principles and conditions of Shariah contracts;
ii) To provide focus on the features of the Shariah contracts that form the basis of Islamic financial products and services;
iii) To provide the basis for decisions on matters relating to conditions, mechanisms and the implementation of Shariah contracts;
iv) To facilitate Islamic finance professionals and practitioners in the design and development of Islamic financial products and services; and
v) To facilitate the formulation of policies and guidelines on contracts adopted by Islamic financial services industry.
The SPR1 will serve as an important reference document, particularly for Islamic financial institutions, Shariah advisors, academia, researchers, students and members of the public who have interest in Islamic finance. SPR1 outlines the main Shariah requirements in the contracts and provides examples, methods and models for practical application of the contract. In addition, the SPR1 would contribute to further harmonisation in the interpretation and application of Shariah views and opinions, especially among Shariah Committee Members. In this regard, the Shariah parameter document provides an important reference for Shariah Committee Members to arrive at Shariah decisions pertaining to Islamic financial transactions, products and services.
To ensure the robustness of the Shariah Parameter, Bank Negara Malaysia has conducted extensive research and compiled various fatwas as well as views of several local and international Shariah boards. The concept paper was presented to the Shariah Advisory Council of Bank Negara Malaysia and subsequently circulated to the industry, academia, international bodies and other relevant stakeholders for feedback and comments.
About Bank Negara Malaysia
Bank Negara Malaysia (BNM) was established in 1959, under the Central Bank of Malaysia Act 1958 (Revised -1994). The central bank is principally entrusted to uphold monetary and financial stability and maintain oversight over the payments system in the country. By maintaining monetary stability through prudent conduct of monetary policy, BNM has kept the average inflation low and preserved the purchasing power of the ringgit, thus securing the prospects for sustainable economic growth and development. Over the years, BNM has significantly contributed to the development of a comprehensive, efficient and resilient financial sector that has been able to meet the increasingly sophisticated needs of consumers and businesses. Malaysia's financial sector now distinctively encompasses both the conventional and Islamic financial services.
Focusing in Islamic finance where Malaysia has a comparative advantage, BNM has taken the lead in promoting Malaysia as an International Islamic Financial Centre (MIFC). Within this initiative, BNM approves licenses for establishment of International Islamic Banks and International Takaful Operators as well as building the necessary institutions, including International Centre for Education in Islamic Finance (INCEIF) and International Shari'ah Research Academy for Islamic Finance (ISRA) in promoting training, education and research to advance the talent development for the Islamic financial services industry. Meanwhile, the BNM Shariah Advisory Council ascertains applications of Shariah principles on Islamic financial services by providers under the purview of BNM and acts as an advisor to BNM on Shariah matters on such services.
# # #