Kuala Lumpur: Malaysia, considered to be the leader in global Islamic Finance sector, is working aggressively to launch shortly a new set of standards for banks dealing in Islamic products and Takaful products which is expected to solidify legal base of Islamic financial institutions.
The country’s central bank governor said that Malaysia is in the final stages of introducing a new legislation for Islamic banking and Takaful products which will give a stronger legal basis to contracts devised by financial institutions.
However, Governor Zeti Akhtar Aziz did not give a time frame for launch of the legal framework. She said that the legislation will help the Malaysian central bank better regulate and supervise the Islamic finance industry, which globally is valued at $1.3 trillion.
“The legal, regulatory and supervisory framework will need to be adjusted to accord greater clarity to the appropriate legal and regulatory treatment,” said Zeti in a speech delivered in Jakarta on Wednesday.
The new framework will streamline the legal requirements across the Islamic finance industry, where there is a current lack of clarity that potentially hinders its growth ambitions.
Malaysia’s Islamic banks are looking to compete with conventional lenders in attracting mainstream customers, which goes towards doubling their share of the country’s total banking assets to 40 percent by 2020 from about 20 percent presently.Malaysia’s Islamic finance industry is currently valued at $144 billion.