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Islamic Financial Services Act 2013 (IFSA)


Transition of Deposits from the Repealed Islamic Banking Act, 1983 (IBA)
to the Islamic Financial Services Act 2013 (IFSA)


Frequently Asked Questions
  1. 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  • Under the repealed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
    investment products.

  • 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.

     

  1. How are the deposits being
    classified?

  • Islamic banks can offer
    both products with principal guaranteed or non- principal guaranteed
    feature.

  • 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
    feature.

     

Islamic Deposit(principal guaranteed Shariah contracts) Investment Account(non- principal guaranteed Shariah contracts)
Wadi’ah (custodian) Mudarabah (profit
sharing)

Qard (loan)

Wakalah (agency)
Tawarruq (sale)  
  1. What is the impact to
    consumers?

  • 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.

     

  1. 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).

     

  1. 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
    PIDM protection.

     

  1. 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
    available.

  • Islamic banks will also
    provide alternatives or options to customer to meet their risk appetite
    and returns.

     

  1. 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.

     

  1. Will there be additional
    charges or cost incurred to the consumers?

  • No charges will be
    imposed to customers for the transition or migration.

     

  1. 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
    investment accounts.

  • The Islamic banking
    institutions will allow sufficient time for the customers to inform them
    of their decision.

     

  1. What are the channels of
    contact for queries and information?

  • Islamic banking
    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:
    1-300-88-5465.

     

Source: Bank Negara Malaysia, 17 March
2014

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