Development of Islamic Finance in Malaysia Family Takaful and Nomination Family Takaful Hibah Bersyarat Kekuatan dan Kelamahan APKI 2013 Kes Arab-Finance (Nota Ringkas) Majlis Penasihat Bank Negara Mudarabah (cheatsheet) Qard (cheatsheet) Takaful Introduction Wadiah (cheatsheet)

1. Aliah (2019)
ISLAMIC BANKING DAN TAKAFUL - HIBAH BERSYARAT
Hibah
Akad pemberikan hak milik harta semasa hidup secara percuma dengan balasan yang tidak menafikan hakikat tabarru’ dalam pemberian
tersebut.
Hibah bersyarat
• Hibah yang menggunakan sighah secara:
➢ Idafah
 Hibah yang disyaratkan untuk tidak dikuatkuasa serta merta, sebaliknya hanya berkuatkuasa pada masa akan dating.
 Contoh: “Saya hibahkan kamu barang ini pada awal bulan hadapan.”
 Tidak sah kerana bertentangan dengan sifat akad hibah yang memberi pemilikan secara serta merta selepas akad dan qabd.
➢ Tawqit
 Hibah dengan cara menetapkan tempoh tertentu untuk pemilikan harta hibah.
 Contoh: “Saya hibahkan kereta ini pada awak untuk setahun.”
 Tidak sah kerana bertentangan dengan sifat hibah yang merupakan akad pindah milik selama-lamanya oleh penghibah kepada
penerima hibah.
➢ Ta’liq
 Hibah dengan meletakkan syarat yang dikaitkan dengan berlakunya sesuatu perkara dalam akad, kemudian barulah akad hibah
berkuatkuasa.
 “Jika Ahmad datang, saya hibahkan pada awak rumah ini.”
 Tidak dibenarkan kerana menyerupai sifat perjudian yang tidak wujud dalam akad.
Dan yang dilakukan dalam bentuk taqyid iaitu akad hibah yang bergantung pada syarat:
Jenis syarat Maksud Pendapat pertama Pendapat kedua
a) Hibah dengan
syarat umra’
• Pinjaman
manfaat
sementara
dengan
• Harus dan sah.
• Kesannya ialah:
• Sah dan terpakai namun syarat umra’ yang dikaitkan
dengan umur atau tempoh adalah terbatal.
• Kesannya ialah:

2. Aliah (2019)
meletakkan
tempoh umum
pada penerima
atau pemberi
hibah.
➢ Umra’ berkuatkuasa
sepanjang hayat penerima
hibah; dan
➢ Harta yang dihibah hanya
akan kembali kepada
pemberi hibah atau waris
yang masih hidup setelah
penerima hibah meninggal
dunia.
➢ Harta menjadi milik penerima hibah serta waris-
warisnya tanpa terikat dengan waktu; dan
➢ tanpa perlu dikembalikan.
• Mazhah Shafie, Hanafi dan Hanbali: Syarat umra’
adalah sia-sia dan tidak membawa sebarang nilai.
➢ Berdasarkan hadis yang diriwayatkan Abu
Hurairah RA dan Jabir RA dengan mafhumnya:
 “Umra itu diharuskan.”
 “Rasulullah SAW menyatakan bahawa umra’
adalah milik orang yang diberikan kepadanya.”
b) Hibah dengan
syarat ruqba
• Imam Abu
Hanifah:
Pemberian hak
milik harta
kepada orang lain
setelah kematian
pemberi hibah.
• Perbezaan hibah
ruqba dan umra’:
➢ Ruqba
berkaitan
dengan
menunggu
waktu
kematian satu
pihak.
➢ Umra’
berkaitan
dengan
• Sah dan terpakai namun syarat ruqba adalah terbatal.
• Kesannya ialah: Harta terus menjadi milik penerima hibah dan dianggap sebagai harta
pusaka setelah kematian penerima hibah tersebut.
• Al-Zuhri: Hibah dengan syarat ruqba sah diguna pakai sebagai wasiat, dan hukum wasiat
adalah terpakai ke atas hibah dengan syarat ruqba.
➢ Berdasarkan hadis yang diriwayatkan oleh Ibn Abbas RA, di mana mafhumnya:
 “Janganlah kamu melakukan ruqba, sesiapa yang melakukan ruqba terhadap
sesuatu, ia membuka jalan perwarisan.”
• Sebab pembatalan syarat ruqba: Terdapatnya unsur gharar dalam tempoh masa bagi
syarat ruqba. Hibah dengan syarat ruqba dilihat sebagai penangguhan terhadap
pemindahan hak milik harta yang dihibah. Ini menunjukkan penghibah telah menta’liqkan
pemberian hibahnya dengan perkara yang tidak pasti.

3. Aliah (2019)
sepanjang
hayat umur
pemberi atau
penerima
hibah sebagai
ukuran
tempoh
penerima
hibah boleh
menggunakan
harta hibah.
c) Hibah dengan
syarat balasan
• Hibah dengan
syarat balasan
bermaksud
pemberian hak
milik harta yang
dikaitkan dengan
sesuatu gantian
atau alas an.
• Mazhab Hanafi kecuali Zufar:
Syarat balasan yang
dikenakan oleh pemberi hibah
dianggap sah dan perlu
ditunaikan bagi menjadikan
akad tersebut berkuat kuasa.
• Mazhab Shafie, Maliki, Hanbali dan Zufar: Akad hibah
dengan syarat balasan adalah sah sama ada
menyatakan jenis balasan yang perlu ditunaikan atau
tidak. Namun, hukum-hukum jual beli seperti hak
shufa’ah, khiyar dan ganti rugi adalah terpakai ke atas
hibah dengan syarat balasan ini.
• Bentuk-bentuk syarat:
➢ Tanggungjawab bagi penerima hibah.
➢ Penerima hibah perlu meninggalkan sesuatu
perbuatan seperti tidak pergi ke suatu tempat.
➢ Melunaskan hutang pemberi hibah.
Amalan di Malaysia
Hibah ruqba
• Daud b Idris v Saiyah bt Said dan 9 yang lain

4. Aliah (2019)
➢ Fakta kes: Dalam memorandum Encik Daud, hibah akan berlaku sekiranya penerima hibah bersetuju dengan syarat di mana antara
syarat tersebut ialah syarat ruqba iaitu harta akan dipindah semula kepada penerima hibah sekiranya penerima hibah meninggal dunia
terlebih dahulu.
➢ Diputuskan: Mahkamah berpuas hati bahawa penerima hibah, iaitu defendan yang memohon supaya hibah yang dilakukan beliau,
adalah sah.
• Rafizah binti Ab Karim dan Kamar bin Ab Karim dan Empat Defendan yang Lain
➢ Fakta: Hibah antara pihak-pihak ini dikaitkan dengan kematian satu pihak.
➢ Diputuskan: Mahkamah merujuk keputusan Majlis Penasihat Syariah Suruhanjaya Sekuriti edisi kedua halaman 141 yang
mengharuskan hibah ruqba dalam Pelaksanaan Borang Akuan Hibah untuk transaksi yang melibatkan akaun bersama Tabung Unit
Amanah bagi akaun yang dipegang oleh orang Islam. Hibah ruqba yang berlaku melalui dokumen pengisytiharan hibah sah dan
terpakai.
• Pemberi hibah masih mempunyai kuasa atas harta yang telah dihibahkan dan penerima hibah belum mendapat milikan ke atas korpus
harta secara mutlak sehingga berlaku kematian satu pihak, sama ada pemberi hibah atau penerima hibah.
Hibah berkuat kuasa selepas kematian pemberi hibah
• Rokiah bt Abdul Manap v Nurul Izzah bt Hamzah
➢ HIbah ruqba berkuat kuasa setelah kematian pemberi hibah.
• Wan Zanariah bt Wan Ahmad v Zaidi bt Endut
➢ Hakim Syarie mengesahkan hibah yang meletakkan syarat supaya pemberian hibah yang dilakukan berkuat kuasa selepas kematian.
Pemberi hibah masih boleh menggunakan manfaat harta hibah
• Merupakan amalan di Malaysia namun terdapat syarat:
➢ Tujuan yang dibenarkan:
 Bagi merealisasikan kemaslahatan yang besar.
➢ Tempoh yang munasabah.
 Ditentukan oleh mahkamah.

5. IBT - Kekuatan dan Kelemahan APKI 2013
• APKI 2013 (Akta Perkhidmatan Kewangan Islam 2013) adalah statut yang
memansuhkan akta yang melibatkan kewangan Islam di Malaysia.
• Perbezaan pertama ialah dalam definisi takaful. Contoh yang akan digunakan untuk
perbandingan ialah AT 1984 (Akta Takaful 1984). Terdapat penambahan dalam definisi
2013 iaitu, “Suatu kumpulan yang sama,” bagi tabung tabarruq atau dana risiko peserta.
Definisi 1984 tidak menjelaskan kewujudan tabung atau dana peserta. Oleh itu, definisi
2013 adalah lebih tepat kerana tabung atau dana peserta itu dinyatakan dengan jelas.
• Dalam konteks penuntut yang sesuai, APKI 2013 telah menggantikan istilah pihak
menuntut wajar dalam AT 1984 dengan istilah baharu iaitu, “penuntut yang sesuai.”
Definisi tuntut turut dijelaskan iaitu APKI 2013 telah mamusakkan kategori ibu bapa atau
penjaga seorang penama. Ini menunjukkan penambahbaikan yang dilakukan oleh APKI
2013.
• Sebelum ini, AT 1984 tidak memberikan peruntukan terperinci mengenai kaedah
pembayaran manfaat takaful. Akan tetapi, dengan berkuatkuasanya APKI 2013, kaedah
pembayaran manfaat takaful telah disenaraikan secara terperinci dalam Jadual 10 APKI
2013.
• Satu lagi perbezaan antara AT 1984 dengan APKI 2013 ialah APKI 2013
memperkenalkan lesen berasingan untuk perniagaan takaful keluarga dan takaful am.
Dahulunya, AT 1984 membenarkan pengendali takaful menjalankan kedua-dua
perniagaan takaful di bawah satu syarikat yang sama. Kimi, pengendali perlu dua buah
syarikat berasingan untuk menjalankan perniagaan takaful keluarga dan am. S 286 APKI
2013 memberikan tempoh lima tahun untuk mematuhi s 16(1) APKI 2013. Kebanyakan
pengendali tidak mematuhi s 16(1) APKI buat masa ini kerana tiada garis panduan untuk
peralihan kepada satu jenis perniagaan takaful. Ini menunjukkan kelemahan dalam APKI
2013.
• Kelemahan APKI 2013 boleh dilihat dalam tadbir urus syarikat. Menerusi s 65(2)f(), jelas
terletaknya tanggungjawab kepada para pengarah IKI (Institusi Kewangan Islam) untuk
“mengambil kira” dengan sewajarnya keputusan jawatankuasa syariah atas isu syariah.
Namun, tiada penerangan selanjutnya bagi maksud “mengambil kira.” Adakah ia
bermaksud pengarah IKI tidak wajib mematuhi keputusan jawatankuasa syariah?
• Kelemahan kedua dilihat dalam konteks kepentingan boleh lindung takaful. Walaupun
konsep tersebut telah dimasukkan dalam APKI 2013, Jadual 8 hanya terpakai untuk
perniagaan takaful keluarga sahaja. APKI 2013 tidak menyebut apa-apa mengenai
konsep kepentingan boleh lindung takaful untuk perniagaan takaful am.
• Dari perspektif syariah, qard adalah kontrak bersifat sukarela. Namun, s 95 APKI 2013
telah menjadikan qard satu tanggungjawab atau liability. Ini dilihat agak tidak menepati
semangat kontrak qard.
• Peruntukan ini juga dilihat tidak konsistent dengan prinsip takaful kerana ia meletakkan
liability kewangan ke atas pemegang saham syarikat takaful sedangkan dalam konsep
takaful, para peserta yang bertanggungjawab menyediakan tabungan untuk manfaat
bersama secara tolong menolong.
• Seterusnya, terdapatnya peruntukan dalam APKI 2013 berkaitan kewajipan pendedahan
dan representasi ke atas pihak peserta takaful. Ia adalah selaras dengan kewajipan
bercakap benar yang dianjurkan oleh Islam di mana, dari perspektif syariah, penipuan
boleh menjejaskan kontrak.
• Namun, terdapat kelemahan iaitu dalam konteks hibah bersyarat di bawah APKI 2013.
Oleh kerana APKI tidak menjelaskan siapa individu yang layak dinamakan sebagai
benefisiari di bawah hibah bersyarat ini, kontrak itu mungkin boleh disalahgunakan untuk
menafikan hak waris daripada menerima manfaat takaful.
• Dalam APKI 2013, undang-undang telah diperkemaskan dan dilihat lebih menepati
kehendak Syariah. Walau bagaimanapun, beberapa kajian lanjut dari sudut Syariah

6. perlu dilakukan dalam aspek kepentingan boleh lindung takaful, qard dan pelaksanaan
hibah bersyarat dalam pembayaran manfaat takaful.

7. IBT - Nota Ringkas Bagi Kes Arab-Malaysian Finance Bhd v Taman Ihsan Jaya Sdn
Bhd & Lain-lain
Penghakiman ini, yang timbul daripada pengenalan pembiayaan Islam di Malaysia,
merupakan pertimbangan terhadap prinsip-prinsip asas yang mentadbir pembiayaan Islam
dan had-had bidang kuasa yang dikenakan kepada mahkamah sivil dalam menangani isu-
isu ini disebabkan oleh susunan perlembagaan Malaysia.
Diputuskan bahawa apabila berurusan dengan kes-kes yang melibatkan kemudahan
pembiayaan Islam, mahkamah sivil berfungsi secara tegas sebagai mahkamah sivil dan
tidak menjadi Mahkamah Syariah. Fungsi mahkamah sivil, dalam hal ini, adalah untuk
memberikan keputusan yang dipertimbangkan secara kehakiman di hadapannya menurut
undang-undang dan bukan mengaplikasikan undang-undang Islam seperti ia adalah
Mahkamah Syariah. Fungsinya adalah untuk menguji aplikasi konsep Islam dan untuk
memastikan bahawa transaksi tersebut di dalam kes-kes di hadapannya tidak melibatkan
apa-apa unsur yang tidak dipersetujui di dalam Islam.

8. Majlis Penasihat Syariah (MPS) Bank Negara Malaysia ditubuhkan pada tahun
1997 sebagai badan berkuasa tertinggi dalam menentukan perkara-perkara
Syariah berhubung dengan kewangan Islam di Malaysia. MPS telah diberikan
mandat untuk menentukan hukum Syarak bagi perniagaan perbankan Islam,
takaful, kewangan Islam, pembangunan kewangan Islam atau perniagaan lain
yang berlandaskan prinsip Syariah yang di bawah kawal seliaan Bank Negara
Malaysia. MPS sebagai badan rujukan dan penasihat Bank Negara Malaysia
berhubung dengan perkara Syariah juga bertanggungjawab untuk mengesahkan
semua produk perbankan Islam dan takaful bagi memastikan produk-produk
tersebut mematuhi prinsip Syariah. Selain itu, MPS juga berperanan sebagai
penasihat Bank Negara Malaysia berhubung dengan isu-isu berkaitan dengan
urus niaga atau urusan kewangan Islam Bank Negara Malaysia dan badan-badan
berkaitan yang lain.
Berdasarkan peruntukan Akta Bank Negara Malaysia 2009, peranan dan fungsi
MPS telah diperkukuh lagi dengan pemberian status badan berautoriti tunggal
dalam menentukan perkara-perkara Syariah berhubung dengan perbankan Islam,
takaful dan kewangan Islam. Keputusan MPS bukan sahaja terpakai bagi institusi
kewangan Islam, malah juga oleh mahkamah dan penimbang tara yang perlu
merujuk kepada keputusan MPS untuk setiap prosiding yang berkaitan dengan
perniagaan kewangan Islam, dan juga memperakui bahawa keputusan MPS
adalah mengikat.
MPS dianggotai oleh para ilmuwan Syariah dan pakar kewangan Islam terkemuka,
yang mempunyai kelayakan, pengalaman dan pengetahuan yang mendalam
dalam pelbagai bidang, khususnya dalam bidang kewangan dan perundangan
Islam.
MAJLIS PENASIHAT SYARIAH
BANK NEGARA MALAYSIA
xv

9. IBT CHEATSHEET
MUDARABAH (DOCUMENT POLICY BNM)
CONTRACTING PARTIES CAPITAL OF MUDARABAH PROFIT OF MUDARABAH
• Rabbul mal - Capital provider
• Mudarib - Entrepreneur
• Must be - Natural
person/legal entity with legal
capacity
• Capital
➢ What: Asset provided by
rabbul mal to mudarib
for mudarabah venture
➢ Conditions: Identifiable,
available and accessible
for mudarib
➢ Form: Cash or in-kind
(similar), including
intangible assets
• Profit
➢ Profit is value created
above capital
➢ It is a fundamental
component of
mudarabah
➢ Rules:
 Cannot be fixed in
the form of
percentage
 Cannot be pre-
determined fixed
amount to one party
which deprives the
profit share of other
contracting party
 Does not have to be
guaranteed by
mudarib
 Is shared on a ratio
mutually agreed
• Legal capacity of a person
➢ Capacity to assume
rights and
responsibilities
➢ Capacity to give legal
effect to his action
• Conditions
➢ Possess sound mind
➢ Can distinguish between
what is harmful or
beneficial to one’s
interest
• Capital in-kind - Must be
valued in monetary terms
agreed by contracting parties
• Capital in different currency
- Must be value based on
specific currency agreed by
contracting parties
• Legal capacity of a legal
entity
➢ Eligibility of an entity to
acquire rights and
assume responsibilities
• Debts due to rabbul mal
(either from mudarib or
third party)
➢ Are unqualified as
capital
➢ Are deemed as liability
to rabbul mal
• PSR (Profit Sharing Ratio)
➢ Determined when
entering mudarabah
contract
➢ Can be revised
 Revision must be
mutually agreed by
rabbul mal and
mudarib
• Legal capacity governed
under
➢ Contracts Act 1950
➢ Age of Majority 1971
• All remaining capital upon
dissolution or termination of
mudarabah - Must be
returned to rabbul mal
• Binding if
➢ The terms and
conditions in mudarabah
contract are mutually
agreed between rabbul
mal and mudarib
➢ Does not contravene the
shariah
• Loss
➢ Borne by rabbul mal up
to capital value
➢ Impairement of assets -
Not borne by rabbul mal
except in case of
misconduct, negligence
or breach of specified
terms
➢ Mudarib must give
reasoning for occurrence
of loss
➢ In case of multiple
rabbul mal - loss shall be
born by each rbabul mal
proportionate to their
capital contribution
• Rabbul mal guarantees
capital except in case of
mudarib’s
➢ Misconduct
➢ Negligence
➢ Breach of specified
terms

10. Islamic Banking and Takaful
Qard
• Definition - Payment of money given to
someone to benefit from it, and he is to
ensure the repayment of equivalent
amount.
• Legality
➢ Quran, 64:17 - If you loan to Allah, a
beautiful loan, He will double it to your
(credit) and He will grant you
forgiveness: for Allah is most ready to
appreciate (service), Most Forbearing.
➢ Ibn Majah, hadith no. 2431 - In the
night of journey, I saw on the gate of
the Heaven written, reward for
sadaqah is ten times and reward for
ward is eighteen times. So, I asked the
angel how it is possible. The angel
replied, “Because a beggar who asked
had already had something, but a
borrower did not ask for loan unless he
was in need.”
• Rules and Conditions
➢ Offer and acceptance must be
expressed.
➢ No stipulation of repayment more than
the principal loan amount.
➢ No combination of qard and exchange
contracts - It is unlawful if the lender
stipulates that the borrower must
purchase something from him, sell
something to him or lease his asset.
➢ Writing down the contract is
compulsory. The view is deduced from
Quranic verse, 2:282.
➢ Having witnesses in qard agreement is
highly recommended, to mitigate
dispute between parties.
• Application
➢ In Islamic banking products qard is
commonly used for the current
deposite account and saving deposit
account.
➢ Some Islamic banks use the principle of
wadiah but the modified structure
transforms the contract into qard.
Hence, the bank receives the deposit as
qard.
➢ Qard is also applied by Islamic banks to
provide loan facilities such as the
overdraft facility and cash withdrawal
facility through the use of credit card.
➢ In liquidity management instruments
for IFIs, ward is also used as an
underlying contract.

11. 1
Islamic Banking and Takaful - Takaful
1.0 Concept of Takaful
The word takaful comes from the Arabic word kafalah, which means
guaranteeing each other or joint guarantee.
There are two types of takaful products which are the general and
family takaful. The general takaful covers, inter alia, motor policy,
fire, MRTT and group policy. On the other hand, family takaful is
meant to secure the family conditions from future risks.
Takaful is based on the concept of social solidarity1
, cooperation
and mutual indemnification.2
It is a pact among a group that agrees
to donate to a fund that is used to jointly indemnify covered losses
incurred by the members.
The operations and the fund are commonly managed by a takaful
operator on commercial basis.
Islam is not against the concept of insurance itself but against some
of the means that are used in conventional insurance. For
insurance to be acceptable in Islam, the insurance should avoid the
elements of riba (interest), maisir (gambling) and gharar
(uncertainty), though the elements of gharar may be forgivable
depending on the circumstances.
2.0 Evidence of Legality from Quran, Sunnah and Ijma
2.1 Quran
In the Quran, Allah SWT explained that human beings should
help each other when they are in danger or need help. The
verse in the Quran that illustrate this is Surah Al-Maidah (5):3.
2.2 Prophet’s hadith
“Whosoever removes a worldly grief from a mukmin, Allah
SWT will take away from him one of the grieves of the
1 Solidarity - Unity or agreement of feeling or action, especially among individuals with a common
interest; mutual support within a group.
2 Indemnification - Security against legal liability for one's actions.

12. 2
hereafter. Whosoever alleviates a needy person, Allah SWT
will alleviate from him both the world and the hereafter.”
(Narrated by Abu Hurarira r.a.h)
2.3 Ijma
There have been numerous conferences on Islamic insurance
held worldwide in which Muslim scholars have unanimously
agreed on the validity of insurance practices. Some of those
conferences are listed as follows:
• The Islamic Fiqh Week held in Damascus from 1st - 6 th
April in 1961
• The Seminar held in Morocco on 6th May 1972 which
upheld the validity of insurance business with the
exception of life insurance business
• The Second Conference on Muslim Scholars held in
Cairo in 1965
3.0 Law That Governs Takaful Industry In Malaysia
There are three levels of regulation of the takaful industry which are
premised on local jurisdictions, the standards and guidance notes
issued by the IFSB, and the Insurance Core Principles (ICPs) of the
International Association of Insurance Supervisors (IAIS).
a) Local jurisdiction
In Malaysia, the government has passed the Takaful Act 1984
to uphold the legality of takaful. The Act authorises SAC-BNM
to supervise and advise takaful operations at national level,
and the Shariah advisory committees of respective operators
at institutional level. The IFSA 2013 now supersedes3
the
Takaful Act 1984 to provide for regulation and supervision of
the takaful institutions.
3 Supersedes - Take the place of (a person or thing previously in authority or use); supplant.

13. 3
b) IFSB standards
The IFSB has issued a number of standards that sets the
Shariah, governance and regulatory framework for takaful
operators. For example, in December 2009, IFSB-8 was
issued to adapt and reinforce takaful internationally so they
can stand on level playing field with their conventional
counterparts.
c) ICPs of the IAIS
The IAIS is a voluntary membership organisation of insurance
supervisors and regulators from more than 200 jurisdiction in
nearly 140 countries. The mission of IAIS is to promote
effective supervision of insurance industry to contribute to
global financial stability.

14. Islamic Banking and Takaful
Wadiah
• Definition - Wadiah refers to a contract which the owner or his representatives places an asset with
another party for custody or safekeeping. The term wadiah came from the verb wadaa which means to
deposit.
• Parties
➢ Proprietor of the property - Mudi (depositor)
➢ Person entrusted - Mustawda (custodian)
➢ Deposited asset - Wadiah
• Legality
➢ Quran, 2:283: If you trust one another, then let him who is trusted fulfill his trust, and let him be
conscious of God, his Sustainer.
➢ Abu Dawud, hadith no. 3534: And perform the trust to those who entrusted you and do not betray
those who betrayed you.
• In the light of evidences from the Quran and Sunnah, all Muslim scholars agree on the permissibility of
wadiah.
• Types of wadiah
➢ Wadiah yad amanah (safe custody based on trust)
 Custodian is responsible for safekeeping of asset.
 Custodian will return asset upon request of depositor.
 Custodian is not liable for loss and damage of asset except if they arise from misconduct,
negligence and breach of specified terms.
➢ Wadiah yad damanah (guaranteed safe custody)
 This type combines two contracts, safe-keeping and guarantee.
 It is where custodian guarantees the return of property and agrees to return item upon
request.
• Conditions of wadiah yad amanah
➢ Custodian has a duty to protect the asset from loss and damage. The custodian will not be
responsible expect if the damage arise from his misconduct, negligence or breach of specified
terms.
➢ Custodian cannot entrust asset to a third party without consent of depositor. If he does otherwise,
custodian will be fully responsible for any loss and damage.
➢ Hiring or lending asset can be done only with the permission of the owner.
➢ Custodian must return asset upon request of depositor.
➢ Custodian and owner of asset can agree to pay charges for wadiah service.
• Conditions of wadiah yad damanah
➢ Custodian is entitled to use asset for trading or any other purposes. If the asset is a fungible asset
such as money, the wadiah contract will be construed as qard.
➢ Custodian has right to any income derived from utilisation of asset but is liable for any damage or
loss.
➢ Custodian at his discretion can give some portion of his income as a gift (hibah) to the depositor.
The gift cannot be be in pre-agreed arrangement because this type of wadiah is similar to a load
and therefore, the pre-agreed benefit will be regarded as riba.
➢ Custodian must return asset to owner upon request of depositor.
• Application
➢ Wadiah yad amanah - Less suitable due to its non-commercial features and restrictions such as
non-guaranteed returns and non-utilisation of wadiah asset.
➢ Wadiah yad damanah - Common utilisized to structure various deposit products, namely the
savings and current accounts. The bank as custodian will utilise the deposit placed by depositors to
give financing or to invest, in which all profits belong to bank. The bank at its own discretion, may
give hibah to depositors, on condition that the hibah is not promised upfront and not be a
customary practice.

15. Aliah (2019)
1
Development of Islamic Finance in Malaysia
The development of Islamic finance can be seen in the pre-Islamic period where the
inhabitats of Middle East and Arabian peninsula have conducted trade and business
partnerships. They have followed certain customary commerical practices and traditions.
With the introduction of Islam, they re-evaluated the commercial practices so that they are
consistent with Islamic legal principles.
During the era of Prophet Muhammad SAW, the doctrine of financial operations are derived
from Holy Quran, sunnah or Prophet Muhammad’s SAW examples. To illustrate, Prophet
Muhammad SAW, in numerous sayings, has bought credit, taken financing, give npersonal
property as security or lien and acted as an agent in mudarabah contract with an investment
from Khadijah.
Following the passing of Prophet Muhammad SAW in 632 AD, the spread of Islam began,
together with its Islamic methods and finance.
The first attempts in Islamic finance can be traced to Malaysia and Egypt in the early 1960s.
The first institution that was involved in Islamic finance in Malaysia was the Muslim Pilgrim’s
Savings Corporation, set up in 1963, to help people to save on a regular basis to pay for
their pilgrimage to Makkah. In 1969, this corporation evolved into the Pilgrim’s Management
and Fund Board, or Lembaga Tabung Haji. The success of Lembaga Tabung Haji has
provided the main impetus for establishing Bank Islam Malaysia Berhad (BIMB) which
represents a full-fledged Islamic commercial bank in Malaysia.
Below shows the journey of Islamic Finance in Malaysia:
1960s 1980s 1990s 2000s
1. Pilgrims
Management and
Funboard or
Lembaga Urusan
dan Tabung Haji,
Malaysia
1. Bank Islam
Malaysian
Berhad
2. Syarikat
Takaful
Malaysia
Berhad
1. Islamic
Interbank
Money Market
(IIMM),
Malaysia
2. Bank Muamalat
Malaysia
Berhad
1. Islamic Financial
Services Board
(IFSB), Kuala
Lumpur
2. International
Islamic Liquidity
Management
Corporation
(IILM), Kuala
Lumpur
Malaysia started with the establishment of one Islamic bank in 1983 to spearhead the
introduction of Islamic banking products and services. Takaful was introduced in 1984 to
complement Islamic banking operations as it provides amongst other things, coverage for
Islamic house mortgages.
In addition, Malaysia has also initiated the issuance of Islamic financial instruments by the
government and central bank, Bank Negara Malaysia (BN). In order to achieve uniformity of
shariah decisions and to advise BNM on shariah issues, the Shariah Advisory Council of
BNM (SAC-BNM) was established in May 1997. Its role was enhanced in 2003 when it was
accorded the sole authoritative body on Shariah matters pertaining to Islamic banking,
takaful and finance.
The table below shows Malaysia’s approach in building its Islamic financial system:

16. Aliah (2019)
2
1980s 1990s 2000s 2010s
Phase I
Distinct aspect of
Shariah compliance
in Islamic financial
transactions
Phase II
Specific regulation
allowing
establishment of
Islamimc windows
Phase III
Recognition on the
dual financing
system in Malaysia
Phase IV
Requiremet to
observe end-to-end
Shariah compliance
by IFIs
Malaysia has now evolved into a comprehensive domestic Islamic financial system that is
diversified in terms of its institutions, markets and players.

17. 1
Islamic Banking and Takaful - Family Takaful and Nomination
Family Takaful
• Family takaful is an alternative to life insurance that gives protection to beneficiaries of
participant financially if any calamity or death happens in the future.
• Family takaful distributes takaful benefits in the event of participant’s death. Therefore, the
participant is required to name a person as a nominee to receive takaful benefits.
Nomination
• Process of appointing a person or persons to receive takaful benefits as conferred by takaful
participant by certificate, in the event of death of participant.
Purpose of nomination
• To ensure loved ones are financially protected in case of untimely accident or death of
participant.
• To ensure the takaful operator to disburse the benefits to the nominated person promptly
without the need to wait for distribution orders from court.
Status of nominee
• The question about the status of nominee is whether he is the sole beneficiary or simply an
executor.
• Two major views regarding status of nominee:
➢ One view holds that takaful benefits are wealth of the deceased, thus, is part of his estate to
be distributed according to faraid, and thus only his legal heirs can be nominated.
➢ The other view holds that the participant can gift the takaful benefits to anybody as a hibah
and hence can nominate anybody.
Nominee as an executor
• Re Ismail bin Rentah
➢ The deceased nominated his daughter to receive his shares in case of his death.
➢ The judge decided that although the daughter was nominated it did not mean that she can
enjoy the monetary benefits as those benefits formed part of the estate of the deceased,
and hence should be redistributed according to Islamic laws of faraid.
➢ In this case the daughter’s role is that of an executor.
• The National Council of Muslim Religious Affairs in Malaysia, Fatwa 1973:
“Nominees of the funds in Employees Provident, Post Office Savings Bank, Bank, Insurance,
and Cooperative Society are in the position of persons who carry out the will of the deceased
or the testator. They can receive the money of the deceased from the sources stated to be
divided among the persons who are entitled according to the Muslim Law of Inheritance.”
• Takaful Act 1984 does not provide express rule on nomination. S 65(1) of the Act requires the
operator to distribute the savings and takaful benefits as predetermined by the participant.
“When a participant, in relation to any family solidarity certificate or solidarity certificates,
dies and on his death takaful benefits are payable under the certificate or certificates, the
operator may make payment to a proper claimant such sum of the solidarity moneys as may
be prescribed without the production of any probate or letters of administration and the
operator shall be discharged from all liability in respect of the sum paid.”

18. 2
• It has been clarified that the ‘proper claimant’ as mentioned by the act is not necessarily the
nominee as the act goes on to define proper claimant in Section 65(4):
“In this section, “proper claimant” means a person who claims to be entitled to the sum in
question as executor of the deceased, or who claims to be entitled to that sum under the
relevant law.”
• However, Section 167 of the Insurance Act 1996, which applies to the Muslim participant,
provides that the nominee in a policy will be treated as a mere executor and not as a sole
beneficiary over the benefits of the policy.
• Moreover, the benefits over the policy will be regarded as part of the estate of the participant
and will also be subject to his (the participant) debts.
• Bank Negara Malaysia leaves the status of the nominees up to the Takaful operators, and the
majority of the takaful operators in Malaysia prefer to follow the view that the nominee is
simply an executor.
Nominee as a Sole Beneficiary
• While in the Re Ismail bin Rentah (1940) case, it was decided that nominee is simply an executor,
in other cases such as Re Man bin Mihat (1965) and Re Bahadun bin Haji Hassan (1974) , the
judge ruled that the participant had gifted the benefits to the nominee hence it is his to be
enjoyed as the sole beneficiary.
• Bank Negara Malaysia’s Sharia Advisory Council issued a resolution saying that the takaful
benefits can be given away as Hibah. The resolution gives the final decision up to the takaful
operators and goes on to say that the nomination form has to be standardized and the status of
the nominee whether as a beneficiary or an executor has to be clearly stated. The participants
should be clearly informed of the effect of each option and the eventual distribution of benefits
should be based on the contract.
Proposed Solution
• The resolution of the Sharia Advisory Council seems to offer the best practice for the issue of
nomination by leaving it to the Takaful operators and with the requirement of clearly specifying
the status of the nominee in the nomination form. However as to the sharia compliance of both
these solutions, opinions differ and further research is needed to find a solution which would
remove these divergent of opinions.

19. Islamic Banking Takaful
Family Takaful
• A long-term policy, used for children’s education, their pension and compensation for
dependants in the event of death and disability, amongst others.
• Ranges from 10-30 years.
• Operators divide contributions into two parts:
➢ Participant’s account (savings account)
➢ Participant’s special account (tabarruq account) for meeting losses of fellow participants
 In the event of a loss, the participant will be compensated according to a pre-agreed
formula.
 The clause of tabarruq is incorporated in the contract.
• If a participant dies prematurely, his family gets the amount in the participant’s account plus
dividends, and the amount in the participant’s special account as if he had continued
contributions until the end of the maturity period.
• If the participant withdraws from the takaful programme, he will get the amount in the
participant’s account only.
• Common family takaful products:
➢ Savings and educational plans.
➢ Retirement plans.
➢ Retirement annuities.
➢ Waqf plans and ancillary benefits added to the main plans.
 Protection for critical illness, disability, accidental death or waiver contribution.
Wakalah Model
• Contract of agency.
• Participants remain the actual owners of the takaful fund and the takaful operators acts as an
agent of the participants who manages the fund for a defined fee.
• As an agent, the operator is entitled to an agency fee (remuneration) and a performance fee (as
commission).
• The surplus of participants’ investment funds goes to the participants.
• The agency fee rate is fixed annually in advance in consultation with the Shariah committee or
the Shariah board of the takaful operator.
• The performance fee, which is related to the level of performance, is given as an incentive for
good administration and governance of the participants’ fund.
• Main issue in pure wakalah model:
➢ The management and shareholders of a takaful operator cannot share in the profits because
they merely act as an agent to the participants.
➢ However, they may be entitled to a fee based on their performance in the investment.

20. ➢ Therefore, many takaful operators today attempt to adopt a combination of wakalah and
mudarabah or a modified wakalah model.

21. Vocab
1) Takaful: A type of insurance system devised to comply with the sharia laws, in which money is
pooled and invested.