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as3 eko islm

as3 eko islm

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08/29/2010

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Malaysia Toward an Islamic State
 
ISLAMIC BANKING IN MALAYSIA 
 
 A significant development in the Muslim World in the seventies and eighties was the pan-Islamic movement. This movement aimed to revive the glory of Islam and began todemand the application of Shariah in all aspects of life. The effort to establish in IslamicBanking is one manifestation of this movement. The Muslim countries began torediscover Islam and wanted to mould their economic and financial activities inaccordance with Islamic values.
 
 The seventies and eighties of the present century has witnessed the emergence of anumber of Islamic banks and financial institutions whose modes of operation aredistinct from those of conventional banks. The establishment of these institutions is oneof the several manifestations of the 'back to religion' movement which is fast gainingstrength in present day muslim societies (quoted in Abulhasan et al. 1991: 155)
 
 The Muslim world has been over-burdened for too long by western modes of socialand economic thought. A large portion of the Muslim worldhad been subjugatedculturally, economically and politically by the colonial powers. Even though they haveachieved independence from their colonial masters, the colonial principles are still deeprooted in the social, economic, political and cultural life of Muslim communities. Thus,the emergence and expansion of an Islamic banking system is the starting point of a new  path breaking change in the Muslim world. It is a process of liberating the Muslims fromthe yoke of domination by western thought, values and institutions and remodeling theirsocial and economic life in accordance with shariah.
 
 The issue of Riba has long been a problem for Muslims. Even what constitutedRiba itself has been a subject under serious discussion. The existence of Riba has been
 
arg
ued
 
obe
a ma
jo
r fa
c
 
o
r f 
o
r t
he
 
lo
¡ 
 
 p
arti
c
i
 p
ati
on
 
o
f t
he
Ma
l
a
 y
¢ 
in t
he
 
eco
n
o
mi
c
 a
c
tiviti
e
¢ 
 
o
f Ma
l
a
 y
¢ 
ia
.
T
he
 
e
¢ 
ta
bl
is
h
m
e
nt
o
f BIMB is a ma
jo
r st
ep
t
o
¡ 
ar
d
s an int
e
r
e
st-fr
ee
finan
c
ia
l
s
 y
st
e
m in Ma
l
a
 y
sia
.
T
h
is mark 
ed
t
he
 
e
sta
bl
is
h
m
e
nt
o
f m
o
r
e
Is
l
ami
c
 
co
mm
e
r
c
ia
l
instit
u
ti
o
ns
u
n
de
r t
he
n
e
¡ 
m
ode
 
o
f t
he
Is
l
amizati
o
n P
ol
i
cy
 
o
f Dr
.
Ma
h
at
h
irM
uh
amma
d.
 
2.
T
he
Em
e
rg
e
n
ce
 
o
f Is
l
ami
c
Banks
 
 T
he
 
ele
m
e
ntar
 y
 
co
n
cep
ts
o
f m
ode
rn Is
l
ami
c
 
b
anking
d
at
e
 
b
a
c
k t
o
t
he
mi
d
1
940
s
.
 M
odel
s f 
o
r Is
l
ami
c
 
b
anking a
 ppe
ar
ed
in t
he
mi
d
-1
950
s
,
 
bu
t
co
m
 p
r
ehe
nsiv 
e
an
d
 
de
tai
led
 
co
n
cep
ts f 
o
r int
e
r
e
st-fr
ee
 
b
anking
o
n
ly
a
 ppe
ar
ed
in t
he
 
l
at
e
1
960
s
.
T
he
 
 pol
iti
c
a
l
 
e
nvir
o
nm
e
nt
du
ring t
h
at tim
e
a
l
m
o
st a
ll
M
u
s
l
im
cou
ntri
e
s was
h
ar
dly
fav 
o
ra
ble
o
r a
ch
ang
e
in t
he
 
e
ntir
e
s
 y
st
e
m
o
b
anking an
d
finan
ce.
In fa
c
t
,
t
he
first
e
£ 
 pe
rim
e
nt inIs
l
ami
c
 
b
anking was s
e
t
up
 
u
n
de
r
co
 v 
e
r in Mit G
h
amr
,
Eg
 yp
t in 1
963.
T
he
m
odel
o
r t
he
 
e
£ 
 pe
rim
e
nt was t
he
G
e
rman Savings
b
ank m
od
ifi
ed
t
o
 
co
m
 ply
wit
h
Is
l
ami
c
 
 p
rin
c
i
 ple
s
,
 i
.e.
it was
b
arr
ed
fr
o
m
ch
arging an
d
 
 p
a
 y
ing int
e
r
e
st
.
N
e
 v 
e
rt
hele
ss
,
t
he
 
ch
art
e
r
o
f t
he
 Bank 
d
i
d
n
o
t r
e
e
r t
o
S
h
aria
h.
 
 T
he
s
eco
n
d
Is
l
ami
c
C
o
nf 
e
r
e
n
ce
 
o
f F
o
r
e
ign Minist
e
rs in 1
973
a
dop
t
ed
a
docu
m
e
nt
o
n t
he
"Instit
u
ti
o
n
o
f an Is
l
ami
c
Bank 
,
E
co
n
o
mi
c
s an
d
Is
l
ami
c
D
oc
trin
e
s"
.
In 1
974,
t
he
 Is
l
ami
c
D
e
 v 
elop
m
e
nt Bank 
(
IDB
)
was
e
sta
bl
is
hed
as a r
e
s
ul
t
o
f t
h
is
co
nf 
e
r
e
n
ce.
T
he
 m
e
m
be
r stat
e
s
o
f t
he
OIC
bec
am
e
m
e
m
be
rs
o
f t
he
IDB
.
T
he
IDB
helped
t
o
 
e
sta
bl
is
h
an
u
m
be
r
o
f Is
l
ami
c
 
b
anks in vari
ou
s
cou
ntri
e
s
.
 
B
e
ginning in 1
974,
s
e
 v 
e
ra
l
Is
l
ami
c
 
b
anks
h
av 
e
 
bee
n
e
sta
bl
is
hed
h
i
ch
in
clude:
 D
ub
ai Is
l
ami
c
Bank in 1
975,
Faisa
l
Is
l
ami
c
Bank 
o
f S
ud
an in 1
977,
Faisa
l
Is
l
ami
c
 Eg
 yp
tian Bank an
d
Is
l
ami
c
Bank 
o
f J
o
r
d
an in 1
978,
Is
l
ami
c
Bank 
o
f Ba
h
rain in 1
979,
t
he
 Int
e
rnati
o
na
l
Is
l
ami
c
Bank 
o
f Inv 
e
stm
e
nt an
d
D
e
 v 
elop
m
e
nt
,
 
Lu
£ 
e
m
bou
rg in 1
980
an
d
 BIMB in 1
983.
T
od
a
 y,
t
he
r
e
ar
e
m
o
r
e
t
h
an a
hu
n
d
r
ed
finan
c
ia
l
instit
u
ti
o
ns w 
h
i
ch
 
cl
aimt
o
 
be
 
ope
rating
 p
artia
lly
 
o
r f 
ully
 
o
n an int
e
r
e
st-fr
ee
 
b
asis in
34
 
cou
ntri
e
s
.
 
Is
l
ami
c
 
b
anking
h
as
bee
n a
dop
t
ed
at t
he
nati
o
na
l
 
le
 v 
el
in Pakistan
,
S
ud
an
,
an
d
Iran
,
 an
d
t
hey
 
h
av 
e
 
dec
i
ded
t
o
Is
l
amiz
e
t
he
hole
 
b
anking s
 y
st
e
m
.
Iran
e
na
c
t
ed
a n
e
 w 
b
anking
l
aw in A 
u
g
u
st 1
983
r
equ
iring
co
m
 ple
t
e
a
bol
iti
o
n
o
f int
e
r
e
st
by
Mar
ch
1
985
 
(
M
.
N
.
Si
dd
i
q
i 1
988:
 
48).
S
ud
an
op
t
ed
o
r a t
o
ta
l
 
ch
ang
e
he
n a
 p
r
e
si
de
ntia
l
 
dec
r
ee
wasiss
ued
in 1
984,
 
d
ir
ec
ting a
ll
 
b
anks t
o
st
op
 
de
a
l
ing wit
h
int
e
r
e
st
.
T
he
C
e
ntra
l
Bank 
o
S
ud
an
,
 
o
n 1
0
D
ece
m
be
r 1
984,
 
d
ir
ec
t
ed
a
ll
 
co
mm
e
r
c
ia
l
 
b
anks t
o
st
op
 
de
a
l
ing wit
h
int
e
r
e
st wit
h
imm
ed
iat
e
 
e
ff 
ec
t
,
an
d
t
o
n
e
g
o
tiat
e
 
co
nv 
e
rsi
o
n
o
e
£ 
isting
depo
sit int
o
inv 
e
stm
e
nt
depo
sits
o
r an
 y
 
o
t
he
r kin
d
 
o
depo
sits in a
cco
r
d
an
ce
wit
h
s
h
aria
h.
ll
 
ou
tstan
d
ingint
e
r
e
st
be
aring a
d
 van
ce
s w 
e
r
e
 
e
it
he
r t
o
 
be
s
e
tt
led
t
h
r
ou
g
h
r
ep
a
 y
m
e
nt
o
r t
hey
 
h
a
d
t
o
 
be
 
co
nv 
e
rt
ed
int
o
 
o
n
e
 
o
f t
he
Is
l
ami
c
m
ode
s
o
f finan
c
ing
.
F
o
r
e
ign transa
c
ti
o
ns w 
e
r
e
t
o
 
co
ntin
ue
 
o
n t
he
 
b
asis
o
f int
e
r
e
st ti
ll
an a
l
t
e
rnativ 
e
wa
 y
as avai
l
a
ble.
 
3.
T
he
T
heo
r
 y
 
o
f Is
l
ami
c
Banking
 
3.
1 E
co
n
o
mi
c
Im
 p
a
c
t
o
f Int
e
r
e
st
 
 
 At t
he
 
ou
ts
e
t
,
t
he
m
o
st im
 po
rtant
dep
art
u
r
e
 
o
f Is
l
ami
c
 
b
anking fr
o
m
co
nv 
e
nti
o
na
l
 
b
anking is t
he
 
 p
r
oh
i
b
iti
o
n
o
i
b
a
,
an
d
 
 p
r
o
m
o
ting Pr
o
fit an
d
 
Lo
ss S
h
aring
(
P
L
S
)
as ana
l
t
e
rnativ 
e
t
o
 
i
b
a
.
T
he
 
 p
r
oh
i
b
iti
o
n
o
f int
e
r
e
st is
ob
 vi
ou
s in t
he
Q
u
ran as w 
ell
as in t
he
 S
u
nna
h.
 
i
b
a
o
rigina
lly
m
e
ant 'in
c
r
e
as
e
an
d
gr
o
 wt
h
'
.
T
h
is m
e
aning is tak 
e
n fr
o
m t
he
 Q
u
ran
(22:5).
In
c
r
e
as
e
m
e
ans t
he
in
c
r
e
as
e
 
o
 v 
e
r
c
a
 p
ita
l
 
o
r n
o
mina
l
am
ou
nt
,
t
he
in
c
r
e
as
e
 
be
ing
e
it
he
r
l
arg
e
 
o
r sma
ll.
cco
r
d
ing t
o
Is
l
ami
c
 
l
aw 
,
 
i
b
a t
ech
ni
c
a
lly
r
e
e
rs t
o
t
he
 
 p
r
e
mi
u
m t
h
at m
u
st
be
 
 p
ai
d
 
by
t
he
 
bo
rr
o
 w 
e
r t
o
t
he
 
le
n
de
r a
lo
ng wit
h
t
he
 
 p
rin
c
i
 p
a
l
 am
ou
nt as a
co
n
d
iti
o
n f 
o
r an
e
¤ 
t
e
nsi
o
n in its mat
u
rit
 y.
In 1
992,
t
he
Pakistan F
ede
ra
l
 S
h
aria
h
C
ou
rt r
uled
t
h
at
:
 
It mak 
e
s n
o
 
d
iff 
e
r
e
n
ce
he
t
he
r t
he
 
lo
an is f 
o
r
co
ns
u
m
 p
ti
o
n
 pu
r
 po
s
e
 
o
r f 
o
r
co
mm
e
r
c
ia
l
 
 pu
r
 po
s
e
s
.
It
doe
s n
o
t matt
e
r if t
he
rat
e
 
o
f int
e
r
e
st is
lo
 w 
o
r
h
ig
h,
sim
 ple
 
o
r
co
m
 pou
n
d
o
rs
ho
rt
o
r
lo
ng tim
e
s
,
 
be
tw 
ee
n t
he
tw 
o
M
u
s
l
ims
o
r
be
tw 
ee
n a
c
itiz
e
n an
d
a stat
e
 
o
r
be
tw 
ee
n tw 
o
stat
e
s
.
An
 y
 
e
¤ 
ce
ss w 
h
i
ch
is
 p
r
e
-
de
t
e
rmin
ed
 
o
 v 
e
r t
he
 
 p
rin
c
i
 p
a
l
s
u
m in a
lo
antransa
c
ti
o
n wi
ll
 
co
nstit
u
t
e
 
i
b
a in a
ll
 
c
ir
cu
mstan
ce
s
(quo
t
ed
in K 
.
Za
heed
1
994:
 
83)
 
 T
h
is imm
ed
iat
ely
 
le
a
d
s
u
s t
o
t
he
 
e
ss
e
n
ce
 
o
f Is
l
ami
c
 
b
anking; an Is
l
ami
c
 
b
ank is afinan
c
ia
l
instit
u
ti
o
n t
h
at
co
n
duc
ts its
ope
rati
o
ns in a
cco
r
d
an
ce
wit
h
S
h
aria
h
 
 p
rin
c
i
 ple
s
.
If  w 
e
 
h
av 
e
t
o
 
co
ntrast t
he
Is
l
ami
c
 
b
ank t
o
an
e
¤ 
isting
co
nv 
e
nti
o
na
l
 
b
ank 
,
e
ma
 y
sa
 y
t
h
at w 
h
i
le
t
he
 
l
att
e
r
e
arns t
he
ma
jo
r
 po
rti
o
n
o
f its r
e
 v 
e
n
ue
s an
d
 
e
¤ 
 pe
ns
e
s
o
n t
he
 
b
asis
o
int
e
r
e
st
,
t
he
o
rm
e
r
e
arns t
he
sam
e
 
o
n t
he
 
 p
r
o
fits
.
In t
he
 
ope
rati
o
n
o
f an Is
l
ami
c
 
b
ank 
,
 
 p
r
o
fits t
he
r
e
o
r
e
ass
u
m
e
t
he
 
 pl
a
ce
 
o
f int
e
r
e
st in a
co
nv 
e
nti
o
na
l
 
b
ank 
.
'Us
u
r
 y
'
,
t
he
 
o
rigina
l
 nam
e
o
r m
ode
rn int
e
r
e
st
.
 
BANK IS
L
 AM MA 
L
 AYSIA BE
RH
 AD
(
BIMB
)
 
BIMB was
e
sta
bl
is
hed
aft
e
r t
he
 
e
na
c
ting
o
f t
he
Is
l
ami
c
Banking A 
c
t
(
IBA 
)
in 1
983,
t
he
 IBA 
 pe
rmitt
ed
t
he
 
e
sta
bl
is
h
m
e
nt
o
f t
he
first Is
l
ami
c
Bank in Ma
l
a
 y
sia
.
BIMB wit
h
a
 p
ai
d
 
up
 
c
a
 p
ita
l
 
o
M 1
00
mi
ll
i
o
n an
d
an a
u
t
ho
ris
ed
 
c
a
 p
ita
l
 
o
M
500
mi
ll
i
o
n is
c
arr
 y
ing
ou
tits a
c
tiviti
e
s
o
n an int
e
r
e
st fr
ee
 
b
asis
.
T
e
ngk 
u
 
aza
le
ig
h
 
,
t
he
t
he
n Finan
ce
Minist
e
r
de
s
c
ri
bed
t
he
Is
l
ami
c
 
b
ank as t
he:
 First st
ep
in t
he
g
o
 v 
e
rnm
e
nt's
e
ff 
o
rts t
o
insti
ll
Is
l
ami
c
va
lue
s int
o
t
he
 
cou
ntr
 y
's
eco
n
o
mi
c
 an
d
finan
c
ia
l
s
 y
st
e
ms as a r
epl
a
ce
m
e
nt f 
o
r t
he
 
cu
rr
e
nt
 We
st
e
rn-
b
as
e
 
eco
n
o
mi
c
s
 y
st
e
m
(
NST
6
J
uly
1
982)
 
 Takaf 
ul
Ma
l
a
 y
sia
 
S
 y
arikat Takaf 
ul
Ma
l
a
 y
sia B
e
r
h
a
d
was in
co
r
 po
rat
ed
 
o
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as ana
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c
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o
M
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ai
d
 
up
 
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M
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.
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e
rt
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c
 
quo
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m
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t
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l
isting
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f its s
h
ar
e
s
o
n t
he
Main B
o
ar
d
 
o
f t
he
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a
l
a
Lu
m
 pu
r St
oc
k Ex
ch
ang
e
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ce
 
3
1 J
uly
1
996.
As a s
ub
si
d
iar
 y
 
co
m
 p
an
 y
 
o
BIMB
Hold
ings B
e
r
h
a
d,
 
65.5%
 
o
f its
equ
it
 y
is
held
 
by
t
he
BIMB
.
 
Ot
he
r ma
jo
r s
h
ar
eholde
rs ar
e
t
he
Stat
e
Is
l
ami
c
 
Rel
igi
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s C
ou
n
c
i
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s / Bait
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ma
l
s
o
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e
r
e
nggan
u,
Pa
h
ang
,
N
e
g
e
ri S
e
m
b
i
l
an an
d
Amana
h
Sa
h
am Bank Is
l
am
(
 ASBI
).
 
 T
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co
m
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an
 y
 
objec
tiv 
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s is t
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 p
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o
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ul
s
e
rvi
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s
(
Is
l
ami
c
Ins
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ran
ce)
at t
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h
ig
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ar
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ffi
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d
 
 p
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ism t
o
a
ll
M
u
s
l
ims an
d
t
he
 
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ati
o
n in

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