Cover Image

The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002

Effective on 31st January 2016, Development Financial Institutions (Amendments) Act 2015 (Act 618) introduced major amendments to Development Financial Institutions Act 2002 (DFIA 2002) for enhancement of the legal and regulatory framework for Development Financial Institutions (DFIs) in Malaysia...

Full description

Saved in:
Bibliographic Details
Main Authors: Hassan, Rusni, Salim, Azlin Suzana
Format: Conference or Workshop Item
Language:English
English
Published: Springer Nature 2022
Subjects:
HG3368 Islamic Banking and Finance
Online Access:http://irep.iium.edu.my/101053/7/101053_The%20legal%20framework%20of%20conversion%20from%20development%20financial%20institution.pdf
http://irep.iium.edu.my/101053/8/101053_The%20legal%20framework%20of%20conversion%20from%20development%20financial%20institution_Scopus.pdf
http://irep.iium.edu.my/101053/
https://link.springer.com/chapter/10.1007/978-3-031-08090-6_11
Tags: Add Tag
No Tags, Be the first to tag this record!
id my.iium.irep.101053
record_format dspace
spelling my.iium.irep.1010532022-11-10T01:50:52Z http://irep.iium.edu.my/101053/ The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002 Hassan, Rusni Salim, Azlin Suzana HG3368 Islamic Banking and Finance Effective on 31st January 2016, Development Financial Institutions (Amendments) Act 2015 (Act 618) introduced major amendments to Development Financial Institutions Act 2002 (DFIA 2002) for enhancement of the legal and regulatory framework for Development Financial Institutions (DFIs) in Malaysia. The new Part IIIA DFIA 2002 inserts Shariah Requirement to realign with the provisions of Part IV Islamic Financial Services Act (IFSA 2013). Prior to these amendments, the conversion of Bank Pertanian Malaysia Berhad (Agrobank) to Islamic DFIs on 1st July 2015was previously regulated under the ambit of Section 129 DFIA 2002. At the date of conversion, the remaining conventional loan assets of Agrobank amounting to RM59.2 million were permitted to be treated as Non-Shariah Assets where its income has to be recorded as liability and to be channelled to charity. This paper tries to analyze the current laws and regulations regulating conversion of DFIs to Islamic DFIs under DFIA 2002 and the legal issues and challenges faced by DFIs on conversion. This study also gathers information from library research and webinars related to this topic. The study finds Bank Simpanan Nasional (BSN), SME Development Bank Berhad (SME Bank), Bank Pembangunan Malaysia Berhad (Bank Pembangunan) and Export-Import Bank of Malaysia Berhad (Exim Bank) have to obtain written regulatory approval from Bank Negara Malaysia (BNM) to convert from Islamic BankingWindow under Section 33B(1)(b) to Islamic DFIs under Section 33B(1)(a) DFIA 2002 with permission that certain percentage of unconverted conventional loan assets remain as Non-Shariah assets and become liabilities after conversion. This study shows that Section 33B(1),(2) and (3) DFIA 2002 incorporate the new stringent requirements for conversion of entire business of DFIs with literal interpretation that 100% of its assets must be in accordance with Shariah. Springer Nature 2022 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/101053/7/101053_The%20legal%20framework%20of%20conversion%20from%20development%20financial%20institution.pdf application/pdf en http://irep.iium.edu.my/101053/8/101053_The%20legal%20framework%20of%20conversion%20from%20development%20financial%20institution_Scopus.pdf Hassan, Rusni and Salim, Azlin Suzana (2022) The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002. In: International Conference on Business and Technology, ICBT 2021, 6-7 November 2021, Istanbul, Turkey. https://link.springer.com/chapter/10.1007/978-3-031-08090-6_11 10.1007/978-3-031-08090-6_11
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
English
topic HG3368 Islamic Banking and Finance
spellingShingle HG3368 Islamic Banking and Finance
Hassan, Rusni
Salim, Azlin Suzana
The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002
description Effective on 31st January 2016, Development Financial Institutions (Amendments) Act 2015 (Act 618) introduced major amendments to Development Financial Institutions Act 2002 (DFIA 2002) for enhancement of the legal and regulatory framework for Development Financial Institutions (DFIs) in Malaysia. The new Part IIIA DFIA 2002 inserts Shariah Requirement to realign with the provisions of Part IV Islamic Financial Services Act (IFSA 2013). Prior to these amendments, the conversion of Bank Pertanian Malaysia Berhad (Agrobank) to Islamic DFIs on 1st July 2015was previously regulated under the ambit of Section 129 DFIA 2002. At the date of conversion, the remaining conventional loan assets of Agrobank amounting to RM59.2 million were permitted to be treated as Non-Shariah Assets where its income has to be recorded as liability and to be channelled to charity. This paper tries to analyze the current laws and regulations regulating conversion of DFIs to Islamic DFIs under DFIA 2002 and the legal issues and challenges faced by DFIs on conversion. This study also gathers information from library research and webinars related to this topic. The study finds Bank Simpanan Nasional (BSN), SME Development Bank Berhad (SME Bank), Bank Pembangunan Malaysia Berhad (Bank Pembangunan) and Export-Import Bank of Malaysia Berhad (Exim Bank) have to obtain written regulatory approval from Bank Negara Malaysia (BNM) to convert from Islamic BankingWindow under Section 33B(1)(b) to Islamic DFIs under Section 33B(1)(a) DFIA 2002 with permission that certain percentage of unconverted conventional loan assets remain as Non-Shariah assets and become liabilities after conversion. This study shows that Section 33B(1),(2) and (3) DFIA 2002 incorporate the new stringent requirements for conversion of entire business of DFIs with literal interpretation that 100% of its assets must be in accordance with Shariah.
format Conference or Workshop Item
author Hassan, Rusni
Salim, Azlin Suzana
author_facet Hassan, Rusni
Salim, Azlin Suzana
author_sort Hassan, Rusni
title The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002
title_short The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002
title_full The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002
title_fullStr The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002
title_full_unstemmed The legal framework of conversion from development financial institution to Islamic development financial institution in Malaysia under development financial institution Act 2002
title_sort legal framework of conversion from development financial institution to islamic development financial institution in malaysia under development financial institution act 2002
publisher Springer Nature
publishDate 2022
url http://irep.iium.edu.my/101053/7/101053_The%20legal%20framework%20of%20conversion%20from%20development%20financial%20institution.pdf
http://irep.iium.edu.my/101053/8/101053_The%20legal%20framework%20of%20conversion%20from%20development%20financial%20institution_Scopus.pdf
http://irep.iium.edu.my/101053/
https://link.springer.com/chapter/10.1007/978-3-031-08090-6_11
_version_ 1751535908116496384
score 13.211869

Similar Items