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CHAPTER 1 - Introduction of Islamic Banking.pptx
1. CHAPTER 1:
INTRODUCTION TO
ISLAMIC BANKING
MAJOR DR. MOHD ADIB ABD MUIN, IFP, CQIF (WEALTH MANAGEMENT)
SENIOR LECTURER
ISLAMIC BUSINESS SCHOOL (IBS), UUM
BWSB5053 Contemporary Islamic Banking - 2024
3. AL-QURAN
ُكَنْيَب مُكَل ََٰوْمَأ ۟ا ٰٓوُلُكْأَت َ
َل ۟واُنَماَء َينِذَّٱل اَهُّيَأَٰٰٓـَي
َرَت نَع ًة َرَٰـَجِت َونُكَت نَأ ٰٓ َّ
َلِإ ِلِطَٰـَبْٱلِب م
َ
َل َو ۚ ْمُكنِم ٍۢ
اض
ا ًًۭمي ِحَر ْمُكِب َانَك َ َّ
ٱَّلل َّنِإ ۚ ْمُكَسُفنَأ ۟ا ٰٓوُلُتْقَت
٢٩
“O believers! Do not devour one another’s wealth illegally, but
rather trade by mutual consent. And do not kill ˹each other or˺
yourselves. Surely Allah is ever Merciful to you.”
(An-Nisa: 29)
3
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4. INTRODUCTION
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Islamic banking, also known as Sharia-compliant banking or Islamic
finance, is a system of banking and financial activities that comply with
Islamic law (Sharia).
It is based on the concept of profit-and-loss sharing, where both the bank
and the customer share the risks and rewards of financial transactions.
The fundamental principles that guide Islamic banking are rooted in Sharia,
which prohibits certain financial activities such as charging or paying
interest (riba), engaging in excessive uncertainty (gharar), and investing in
businesses that are considered haram (forbidden), such as those involved
in alcohol, gambling, uncertainty, manipulation, speculation, ihtikar and any
other related to haram thing
5. PHILOSOPHY OF
ISLAMIC BANKING
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The philosophy of Islamic banking:
1. Economic Justice and Equity
•Fair Distribution of Wealth: Islamic banking seeks to promote a fair and equitable distribution of wealth and resources. It
aims to minimize the gap between the rich and the poor by ensuring that wealth circulates widely and benefits all segments
of society.
•Avoidance of Exploitation: The prohibition of riba (interest) is central to this philosophy, as charging interest can lead to
exploitation and concentration of wealth among a few. By eliminating interest, Islamic banking promotes fairness and equity.
2. Risk Sharing
•Partnership-Based Models: Islamic banking emphasizes profit and loss sharing (PLS) arrangements, such as Mudarabah
and Musharakah. These models foster a sense of partnership and mutual cooperation between the bank and its clients,
ensuring that both parties share the risks and rewards of any venture.
•Encouragement of Entrepreneurship: By sharing risks, Islamic banking encourages entrepreneurship and innovation, as
6. CONT…
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3. Asset-Backed Financing
•Real Economic Activity: Islamic banking ensures that all financial transactions are backed by tangible assets or real economic activity.
This linkage to the real economy helps to prevent speculative bubbles and ensures that finance supports productive ventures.
•Transparency and Authenticity: Transactions must involve genuine trade and commerce, promoting transparency and authenticity in
financial dealings.
4. Social Responsibility and Ethical Investments
•Halal Investments: Investments must be made in halal (permissible) activities. This excludes businesses involved in gambling, alcohol,
pork products, and other haram (prohibited) sectors.
•Positive Social Impact: Islamic banking seeks to invest in projects that have a positive impact on society, such as those that promote
social welfare, infrastructure development, and environmental sustainability.
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5. Prohibition of Speculation and Uncertainty
•Gharar (Uncertainty): Islamic banking prohibits transactions that involve excessive uncertainty or ambiguity, ensuring that all contractual
terms are clear and well-defined.
•Maisir (Gambling): Speculative activities akin to gambling are also prohibited, promoting stability and reducing the risk of financial crises
caused by speculative bubbles.
6. Ethical Conduct and Integrity
•Honesty and Transparency: Islamic banking requires honesty and full disclosure in all financial transactions. This builds trust between
the bank and its clients and ensures that all parties are fully informed.
•Ethical Practices: Banks are expected to conduct their operations with integrity, adhering to ethical standards and avoiding any form of
deceit or fraud.
7. Community Welfare and Development
•Social Welfare: Islamic banking emphasizes the welfare of the community. It encourages practices that contribute to the social and
economic development of society, such as providing interest-free loans (Qard al-Hasan) for those in need.
•Charitable Contributions: Islamic banks are also encouraged to engage in charitable activities and support social causes, reflecting the
8. PRINCIPLES OF ISLAMIC FINANCE
1. PROHIBITION OF INTEREST (RIBA)
•Definition: Riba Refers To Any Guaranteed Interest or Profit On Loaned Money, Which Is
Prohibited In Islam.
•Implication: Islamic Financial Institutions Do Not Charge or Pay Interest. Instead, They Use
Profit-sharing or Leasing Arrangements To Generate Returns.
9. PRINCIPLES OF ISLAMIC FINANCE
2. Profit And Loss Sharing (PLS)
•Mudarabah: A Partnership Where One Party Provides The Capital, and The Other Provides Expertise and Management.
Profits are Shared According To a Pre-agreed Ratio, While Losses are Borne By The Capital Provider.
•Musharakah: A Joint Venture Where All Partners Contribute Capital And Share Profits And Losses According To Their
Respective Equity Shares.
3. Asset-backed Financing
•Real Economy Linkage: Financial Transactions Must Be Backed By Tangible Assets Or Services. This Ensures That The
Financial Activities Are Connected To The Real Economy.
•Types Of Contracts:
• Murabaha: A Cost-plus Financing Structure Where The Bank Buys An Asset And Sells It To The Customer at A
Markup.
• Ijara: Leasing Where The Bank Buys And Leases Out An Asset, Retaining Ownership While The Customer Uses It.
• Istisna: A Contract For Manufacturing Goods And Commodities, Allowing Cash Payment In Advance And Future
Delivery Or Sale.
10. PRINCIPLES OF ISLAMIC FINANCE
4. Risk Sharing
•Equity-based Financing: The Risk Is Shared Between The Bank And The Customer. In Case Of Profit, Both Benefit, And In
Case Of Loss, Both Bear The Loss Proportionately.
•No Guarantees Of Returns: Fixed Or Guaranteed Returns Are Not Permissible, Promoting A Fair Distribution Of Risk And
Return.
5. Prohibition Of Uncertainty (Gharar)
•Definition: Gharar Involves Excessive Uncertainty And Ambiguity In Contracts.
•Implication: Contracts Must Be Clear And Transparent, Specifying All Terms And Conditions To Avoid Any Form Of Deceit Or
Speculation.
11. PRINCIPLES OF ISLAMIC FINANCE
6. Ethical Investments
•Halal Activities: Investments Must Be Made In Halal (Permissible) Activities. Investments In Businesses Involving Alcohol,
Gambling, Pork, And Other Haram (Prohibited) Activities Are Not Allowed.
•Social Responsibility: Investments Should Consider Social Welfare And Development, Promoting Ethical And Socially
Responsible Business Practices.
7. No Speculation (Maisir)
•Definition: Maisir Refers To Gambling Or Betting.
•Implication: Islamic Finance Prohibits Speculative Activities That Involve Excessive Risk And Uncertainty, Such As Derivatives
And Futures Trading.
12. PRINCIPLES OF ISLAMIC FINANCE
8. Transparency And Disclosure
•Clear Terms: Financial Agreements Must Be Clearly Documented With Full Disclosure
Of Terms To All Parties Involved.
•Honesty: Transparency And Honesty Are Crucial To Maintaining Trust And Fairness In
Financial Transactions.
13. PRACTICAL APPLICATIONS IN ISLAMIC BANKING
•Islamic Banking Products:
• Islamic Mortgages: Home Purchase Plans Based On Diminishing Musharakah Or
Ijara.
• Savings Accounts: Profit-sharing Investment Accounts Instead Of Interest-
bearing Accounts.
• Islamic Bonds (Sukuk): Asset-backed Securities That Provide Returns To
Investors Without Interest.
14. HISTORICAL DEVELOPMENT OF ISLAMIC BANKING IN
MALAYSIA.
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The historical
development of
Islamic banking in
Malaysia is a notable
example of how a
nation has
systematically
integrated Islamic
financial principles
into its economic
framework. Here is a
detailed overview of
the key milestones
and developments:
Early
Beginnings
(1960s-1970s)
• Early Experiments: The 1st significant attempt to introduce Islamic banking in
Malaysia was the establishment of the Tabung Haji (TH) in 1963. TH was created
to help Malaysian Muslims save for their pilgrimage to Mecca through Sharia-
Compliant savings schemes.
Formal
Establishment
(1980s)
•First Islamic Bank: Enactment of the Islamic Banking Act in 1983, which facilitated the establishment of
Bank Islam Malaysia Bhd (BIMB), the 1st Islamic Bank in Malaysia. BIMB began operations in July 1983,
providing a wide range of Sharia-compliant banking products and services.
•Regulatory Support: The Central Bank of Malaysia played a crucial role in supporting the development of
Islamic Banking by providing a regulatory framework.
Expansion and
Diversification
(1990s)
•Market Growth: Establishment of more Islamic financial institutions, including Bank Muamalat Malaysia
Bhd in 1999.
•Dual Banking System: Malaysia adopted a dual banking system, allowing conventional & Islamic banks
to operate side by side. This approach enabled the operation of Islamic financial principal into the broader
financial system.
•Takaful Industry: The Islamic insurance sector also began to grow, with the establishment of Syarikat
Takaful Malaysia in 1984.
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Malaysia's journey in
Islamic banking has
been characterized by
strategic planning,
strong regulatory
support, and a
commitment to
innovation and
excellence.
The country's dual
banking system, robust
regulatory framework,
and proactive measures
to promote Islamic
finance have made
Malaysia a global leader
in the field. Moving
forward, Malaysia aims
to leverage technology
and sustainability to
further enhance its
Islamic banking sector
and contribute to global
financial stability and
inclusiveness.
Consolidation and
Innovation (2000s)
•Islamic Financial Services Act: In 2005, Malaysia introduced the Islamic Financial Services Act (IFSA),
which provided a comprehensive legal framework for Islamic banking, takaful, and other Islamic financial
services.
•Innovative Products: Islamic banks started offering more sophisticated and innovative financial products,
such as Islamic bonds (sukuk), Islamic mutual funds, and Islamic derivatives.
•Internationalization: Malaysia positioned itself as an international Islamic financial hub. Institutions like
the Islamic Financial Services Board (IFSB) and the International Islamic Liquidity Management
Corporation (IILM) were established in Kuala Lumpur.
Global Leadership
and Standardization
(2010s-2020s)
•Global Sukuk Market: Malaysia became one of the leading issuers of sukuk globally, contributing
significantly to the development of the international Islamic capital market.
•Talent Development: Institutions such as the International Centre for Education in Islamic Finance
(INCEIF) and the Islamic Banking and Finance Institute Malaysia (IBFIM) were established to develop
talent and conduct research in Islamic finance.
•Regulatory Enhancements: Continuous enhancements to the regulatory and supervisory frameworks
ensured the robustness and resilience of Islamic financial institutions. BNM introduced guidelines on
Sharia governance, risk management, and liquidity standards tailored for Islamic banks.
Recent
Developments and
Future Directions
• Digital Transformation: The Islamic banking sector in Malaysia is increasingly embracing
digital transformation, offering digital banking services and fintech solutions that comply with
Sharia principles.
• Sustainability and Social Finance: There is a growing focus on integrating sustainability and
social impact into Islamic finance. Initiatives such as green sukuk and social impact bonds are
being explored to support sustainable development goals (SDGs).
• Global Collaboration: Malaysia continues to collaborate with other countries and international
organizations to standardize and harmonize Islamic finance practices globally.
16. IN TR OD U C IN G TH E PR OD U C T OF ISL AMIC BAN KIN G IN
MALAYSIA
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MURABAHA
( COST-PLUS
FINANCING)
MUDARABAH
( P ROFIT-
S HA RING
I NVESTMENT)
A partnership where one party provides the capital (rab-ul-mal) and the other provides expertise and
management (mudarib). Profits are shared based on a pre-agreed ratio, while losses are borne by
the capital provider.
MUSHARAKAH
( JOINT
V E NTURE)
In a Murabaha transaction, the bank purchases an asset and sells it to the customer at a profit margin
agreed upon in advance. Commonly used for asset financing, such as purchasing property, vehicles,
or equipment.
A partnership where all parties contribute capital and share profits and losses according to their
respective shares. Commonly used in business ventures, property financing, and project financing.
17. C ON T…
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I JARA ( L EASING)
I STISNA
( MANUFACTURIN
G /CONSTRUCTIO
N FINANCING)
A contract for manufacturing goods or constructing projects, where the bank agrees to produce or
build and deliver at a future date. Commonly used in construction and manufacturing sectors for
financing projects.
WA KALAH
( AGENCY
A G REEMENT)
The bank purchases an asset and leases it to the customer for a fixed period. Ownership remains with
the bank, and the customer pays rent.
The bank acts as an agent on behalf of the customer to invest funds in Sharia-compliant
investments. Applied in investment products where the bank manages the investment portfolio for
the customer.
18. C ON T…
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TA KAFUL
( ISLAMIC
I NSURANCE)
S UK UK ( ISLAMIC
B O NDS)
Asset-backed securities representing ownership in a tangible asset, usufruct, or services, providing
returns to investors without interest. Used by corporations and governments to raise capital for
projects while providing Sharia-compliant investment opportunities.
Q A RD A L-HASAN
( B ENEVOLENT
L OAN)
A cooperative system of reimbursement or repayment in case of loss, where participants contribute
funds into a pool. Provides insurance coverage for health, life, property, and other areas, ensuring risk-
sharing among participants.
An interest-free loan extended on a goodwill basis, where the borrower is required to repay only the
principal amount. Typically used for social welfare purposes, such as helping individuals in financial
distress.
19. C ON T…
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I SLAMIC
DE POSIT
A CCOUNTS
I SLAMIC CRE DIT
CA RDS
These cards operate on the principles of Tawarruq or Ujrah (service fee) to provide Sharia-compliant
credit facilities. Used for making purchases, with the outstanding balance typically converted into a
fixed-term financing arrangement to avoid interest.
•Savings Accounts: Profit-sharing accounts where depositors earn a share of the bank's profit rather
than interest.
•Current Accounts: Sharia-compliant checking accounts that may not offer profit-sharing but provide
safekeeping of funds.
•Investment Accounts: Based on Mudarabah, these accounts offer higher potential returns through
profit-sharing mechanisms.
20. POSITIONING STAGE OF ISLAMIC BANKING IN
MALAYSIA.
The positioning stage of Islamic banking in Malaysia reflects the
strategic efforts to integrate and establish Islamic banking as a
mainstream financial system within the country.
This stage involves creating a distinct identity, enhancing regulatory
frameworks, promoting public awareness, and achieving competitive
parity with conventional banking.
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21. OVERVIEW OF THE POSITIONING STAGE OF ISLAMIC
BANKING IN MALAYSIA:
1. Creating a Distinct Identity
• Branding and Differentiation: Islamic banks in Malaysia have focused on building a distinct brand that
emphasizes Sharia-compliant financial products and ethical banking practices. They highlight the unique
features of Islamic banking, such as profit-sharing, risk-sharing, and interest-free transactions.
• Cultural and Religious Appeal: By aligning with the cultural and religious values of the Muslim
population, Islamic banks appeal to customers seeking financial solutions that comply with Islamic
principles.
2. Regulatory Framework and Support
• Government and Regulatory Support: The Malaysian government and Bank Negara Malaysia (BNM)
have been instrumental in developing a robust regulatory framework for Islamic banking. Key legislations
such as the Islamic Banking Act 1983 and the Islamic Financial Services Act 2013 provide the necessary
legal foundation.
• Sharia Governance: Establishing Sharia advisory councils and boards within Islamic banks ensures
compliance with Islamic principles. These bodies review and approve all financial products and services to
ensure they meet Sharia standards.
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22. CONT..
3. Public Awareness and Education
• Marketing and Outreach: Islamic banks conduct extensive marketing campaigns to educate the public about the benefits
and principles of Islamic banking. This includes seminars, workshops, and media campaigns.
• Financial Literacy Programs: Initiatives to enhance financial literacy among the general public and specific communities
(such as entrepreneurs and small businesses) help in understanding and adopting Islamic banking products.
4. Product and Service Innovation
• Broad Range of Products: Islamic banks have developed a wide range of products and services that cater to various
customer needs, including retail banking, corporate banking, investment banking, and takaful (Islamic insurance).
• Technology Integration: Embracing digital banking and fintech innovations ensures that Islamic banking services are
convenient, competitive, and accessible to a broader audience.
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23. CONT..
5. Achieving Competitive Parity
• Operational Efficiency: Islamic banks strive to achieve operational efficiency on par with conventional banks. This
includes investing in technology, enhancing customer service, and optimizing business processes.
• Competitive Pricing: Offering competitive rates and terms for financing and investment products helps Islamic banks
attract customers who might otherwise use conventional banking services.
6. International Collaboration and Recognition
• Global Standards and Best Practices: Malaysia actively participates in international Islamic finance forums and
collaborates with global bodies such as the Islamic Financial Services Board (IFSB) and the Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI) to adopt best practices.
• Positioning as a Global Hub: Malaysia aims to position itself as a global hub for Islamic finance by hosting international
conferences, promoting cross-border Islamic finance transactions, and encouraging foreign Islamic banks to establish
operations in the country.
7. Sustainability and Ethical Focus
• Sustainable Finance: Integrating principles of sustainability and social responsibility into Islamic finance products, such
as green sukuk (Islamic bonds for environmental projects), aligns with global trends towards sustainable finance.
• Ethical Investments: Emphasizing investments in sectors that promote social welfare, environmental sustainability, and
ethical business practices reinforces the ethical foundation of Islamic banking.
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24. T H E P O S I T I O N I N G S TA G E O F I S L A M I C B A N K I N G I N M A L AY S I A H A S
B E E N M A R K E D B Y D E L I B E R AT E E F F O RT S T O D I S T I N G U I S H I S L A M I C
B A N K I N G A S A V I A B L E , C O M P E T I T I V E , A N D E T H I C A L LY D R I V E N
A LT E R N AT I V E T O C O N V E N T I O N A L B A N K I N G .
T H R O U G H R O B U S T R E G U L AT O RY S U P P O RT, P U B L I C E D U C AT I O N ,
P R O D U C T I N N O VAT I O N , A N D I N T E R N AT I O N A L C O L L A B O R AT I O N ,
I S L A M I C B A N K I N G H A S C A RV E D O U T A S I G N I F I C A N T N I C H E I N
M A L AY S I A’ S F I N A N C I A L L A N D S C A P E .
T H I S S T R AT E G I C P O S I T I O N I N G N O T O N LY C AT E R S T O T H E R E L I G I O U S
A N D E T H I C A L P R E F E R E N C E S O F T H E M U S L I M P O P U L AT I O N B U T A L S O
A P P E A L S T O A B R O A D E R A U D I E N C E S E E K I N G E T H I C A L A N D
S U S TA I N A B L E F I N A N C I A L S O L U T I O N S .
26. STRENGTHENING STAGE OF ISLAMIC BANKING IN
MALAYSIA.
• The strengthening stage of Islamic banking in Malaysia involves
consolidating gains made during the initial establishment and
positioning phases and focusing on enhancing the robustness,
competitiveness, and sustainability of the sector.
• This stage is characterized by several strategic initiatives aimed at
deepening market penetration, improving operational efficiencies, and
expanding the range of products and services.
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27. COMPONENTS OF THE STRENGTHENING STAGE OF
ISLAMIC BANKING IN MALAYSIA:
1. Enhancing Regulatory Framework
• Robust Sharia Governance: Strengthening the framework for Sharia governance ensures higher compliance and consistency across
all Islamic financial institutions. This includes enhancing the role of Sharia advisory councils and boards, and implementing more
rigorous Sharia audit processes.
• Regulatory Enhancements: Continuous updates to regulations, such as the Islamic Financial Services Act (IFSA) 2013, help address
emerging challenges and align with international standards. Bank Negara Malaysia (BNM) plays a crucial role in this ongoing process.
2. Market Deepening and Broadening
• Increased Market Penetration: Islamic banks aim to deepen their penetration into the Malaysian market by targeting underserved
segments, such as micro, small, and medium-sized enterprises (MSMEs), and rural populations.
• Product Diversification: Expanding the range of Sharia-compliant products and services, including sophisticated investment products,
wealth management services, and comprehensive insurance solutions (takaful).
3. Technological Advancements
• Digital Transformation: Embracing fintech and digital banking innovations to enhance customer experience, operational efficiency,
and reach. This includes mobile banking apps, online banking platforms, and blockchain-based solutions.
• Cybersecurity: Strengthening cybersecurity measures to protect customer data and ensure the integrity of financial transactions.
4. Talent Development and Capacity Building
• Educational Initiatives: Investing in education and training programs to develop a skilled workforce proficient in Islamic finance.
Institutions such as the International Centre for Education in Islamic Finance (INCEIF) play a pivotal role in this area.
• Professional Certifications: Promoting certifications and continuous professional development to ensure that professionals in the
industry remain up-to-date with the latest practices and standards.
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5. Global Integration and Collaboration
• International Partnerships: Forming strategic partnerships with international Islamic financial institutions to
facilitate cross-border transactions and knowledge exchange.
• Standardization Efforts: Actively participating in global standard-setting bodies such as the Islamic Financial
Services Board (IFSB) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to
harmonize practices and standards.
6. Enhancing Financial Inclusion
• Inclusive Financial Products: Developing financial products that cater to the needs of various segments of society,
including those with lower incomes. This includes microfinance initiatives and affordable housing finance.
• Community Outreach: Conducting outreach programs to educate the public about the benefits of Islamic banking
and improve financial literacy.
7. Sustainable and Ethical Finance
• Green Financing: Promoting green sukuk and other sustainable financial products that fund environmentally
friendly projects. This aligns with global trends towards sustainable finance and appeals to ethically-conscious
investors.
• Corporate Social Responsibility (CSR): Strengthening CSR initiatives to enhance the social impact of Islamic
banking, focusing on areas such as poverty alleviation, education, and healthcare.
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8. Operational Efficiency and Risk Management
• Process Optimization: Implementing best practices in process optimization to improve efficiency and reduce
costs. This includes adopting lean management techniques and automating routine processes.
• Advanced Risk Management: Enhancing risk management frameworks to better identify, assess, and mitigate
financial and operational risks. This includes stress testing, scenario analysis, and the development of
comprehensive risk management policies.
9. Customer-Centric Approach
• Enhanced Customer Experience: Focusing on customer satisfaction by providing personalized services,
improving service delivery channels, and resolving customer complaints efficiently.
• Feedback Mechanisms: Implementing robust feedback mechanisms to continuously gather customer insights
and make necessary adjustments to products and services.
10. Strengthening Capital and Liquidity
• Capital Adequacy: Ensuring that Islamic banks maintain strong capital positions to withstand economic shocks
and support sustainable growth. This involves adhering to Basel III requirements and other relevant international
standards.
• Liquidity Management: Developing sophisticated liquidity management tools that comply with Sharia
principles, ensuring that banks have adequate liquidity to meet their obligations.
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30. T h e S t r e n g t h e n i n g S t a g e O f I s l a m i c B a n k i n g I n
M a l a y s i a F o c u s e s O n B u i l d i n g A R e s i l i e n t , C o m p e t i t i v e ,
A n d S u s t a i n a b l e I s l a m i c F i n a n c i a l S e c t o r.
T h r o u g h R e g u l a t o r y E n h a n c e m e n t s , Te c h n o l o g i c a l
A d v a n c e m e n t s , Ta l e n t D e v e l o p m e n t , G l o b a l I n t e g r a t i o n ,
A n d A C o m m i t m e n t To E t h i c a l A n d S u s t a i n a b l e F i n a n c e ,
M a l a y s i a A i m s To S o l i d i f y I t s P o s i t i o n A s A G l o b a l
L e a d e r I n I s l a m i c B a n k i n g .
T h i s S t a g e I s C r u c i a l F o r E n s u r i n g T h a t I s l a m i c B a n k i n g
N o t O n l y M e e t s T h e N e e d s O f T h e M u s l i m C o m m u n i t y
B u t A l s o A p p e a l s To A B r o a d e r A u d i e n c e S e e k i n g
E t h i c a l A n d I n n o v a t i v e F i n a n c i a l S o l u t i o n s .
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The philosophy of Islamic banking is comprehensive and deeply rooted in the ethical
and moral values of Islam. It aims to create a financial system that is just, equitable,
and socially responsible.
By focusing on risk sharing, asset-backed financing, and ethical investments, Islamic
banking not only seeks to avoid harmful practices but also promotes positive
economic and social outcomes.
This philosophy aligns financial activities with the broader goals of social justice,
economic stability, and community welfare.
Islamic finance and banking aim to create a just and equitable financial system by
adhering to ethical principles rooted in Islamic law. This approach ensures that
financial transactions are not only profitable but also socially responsible and fair,
aligning with the values of the broader Islamic community.
Islamic banking products in Malaysia cater to a wide range of financial needs while
adhering to ethical and religious principles.
This diversity and adherence to Sharia compliance have helped Islamic banking
gain widespread acceptance and growth in Malaysia. With continuous innovation
and support from regulatory authorities, the sector is poised for further expansion,
offering viable alternatives to conventional banking products.