|Transition of Deposits from the Repealed Islamic Banking Act, 1983 (IBA)
to the Islamic Financial Services Act 2013 (IFSA)
|Frequently Asked Questions|
Why is there a need to
reclassify the Islamic deposits?
Under the repealed
Islamic Banking Act 1983 (IBA), all monies accepted from customers are
classified as Islamic deposits, which comprise both deposit and
The IFSA provides greater
legal clarity on application of the various types of Shariah financial
contracts, and ensure end-to-end compliance in full cycle of Islamic
banking operations e.g. investment account.
From market conduct
standpoint, the customers are able to clearly differentiate between
products which are principal guaranteed with those which are not.
How are the deposits being
Islamic banks can offer
both products with principal guaranteed or non- principal guaranteed
However, Islamic banks
are required to classify such products as either Islamic deposit which
use Shariah contracts with principal guaranteed feature or investment
account which use Shariah contracts with non- principal guaranteed
|Islamic Deposit(principal guaranteed Shariah contracts)||Investment Account(non- principal guaranteed Shariah contracts)|
|Wadi’ah (custodian)||Mudarabah (profit
What is the impact to
Customers whose Islamic
deposit account are structured based on Shariah contract with
non-principal guaranteed feature will be duly informed of the
alternative products and provided with sufficient information/
transparency to make an informed decision.
Customers would have a
choice to either maintain their funds with Islamic deposit or change to
investment account product depending on the customers’ risk appetite.
Customers will be
accorded sufficient time to inform the Islamic banks of their decision.
During this process the Islamic banks will ensure that the rights of the
customers are protected.
When will this take effect
and how long is the transition period?
To facilitate smooth
implementation of the reclassification process and ensure relevant
stakeholders interest are protected, Bank Negara Malaysia has formulated
a transition plan to allow Islamic banks to complete the process by 30
June 2015 (two year period from the enactment of IFSA).
Would my deposit be protected
by Perbadanan Insurans Am Malaysia (PIDM)?
During this transition
period, all the Islamic deposits under the repealed IBA will remain
status quo and continue to be eligible for PIDM protection until the
completion of the transition plan by the respective Islamic banks. After
the transition, Islamic deposits under the IFSA will remain eligible for
Will the returns and benefits
remain after the conversion?
Islamic banks will be
engaging their customers in providing information and clarification on
the transition as well as the deposits and investment products
Islamic banks will also
provide alternatives or options to customer to meet their risk appetite
Will the principal be
guaranteed after the conversion?
Only for Islamic deposit
products which use Shariah contracts with principal guaranteed as per
under the IFSA.
Will there be additional
charges or cost incurred to the consumers?
No charges will be
imposed to customers for the transition or migration.
Will consumer be notified
during the transition period?
The Islamic banking
institutions will engage with their customers in providing information
and clarification on the differences between the Islamic deposit and
investment account products as well as the options available to them to
either retain their placements in Islamic deposit or migrate to
The Islamic banking
institutions will allow sufficient time for the customers to inform them
of their decision.
What are the channels of
contact for queries and information?
institutions will be making available hotlines, call centres and the
front line staff of their headquarters and branches to attend to further
queries by their customers.
Members of the public can
also contact the Association of Islamic Banks in Malaysia (AIBIM) at
03-20268002/ 8003 and Bank Negara Malaysia at BNMLINK at tel:
Source: Bank Negara Malaysia, 17 March