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Islamic Banking in Malaysia†

Published online by Cambridge University Press:  28 February 2019

Sherin Kunhibava
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Abstract

Islamic banking is the conduct of banking according to Shariah or Islamic law. Statistically Islamic banking has had phenomenal growth, according to the Asian Banker Research Group, the world's 100 largest Islamic banks have set an annual asset growth rate of 26.7% and the global Islamic finance industry is experiencing an average growth of 15-20% annually. Recently the Prime Minister of Malaysia commented that Malaysia has been maintaining its leadership in Islamic banking and finance for over three decades. As an International leader in Islamic banking, it would be interesting to explore the development of Islamic banking in Malaysia. This will be the objective of this paper. This paper will focus on the historical development of Islamic banking in Malaysia, from the creation of the Haj Pilgrim's Fund Board in the 1960s to the current Islamic banking scene of 17 local Islamic banks and five International Islamic banks in operation. This paper will also explore the unique regulatory and governance framework of Islamic banking in Malaysia, by touching on the Islamic banking Act 1983, the Central Bank of Malaysia Act 2009, the Banking and Financial Institutions Act 1989 and the Shariah Governance Framework introduced in 2011 by the Central Bank of Malaysia. This paper will also briefly introduce how Islamic banking works.

Type
Articles
Information
International Journal of Legal Information , Volume 40 , Issue 1-2 , Spring-Summer 2012 , pp. 191 - 201
Copyright
Copyright © 2012 by the International Association of Law Libraries. 

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