Professional Documents
Culture Documents
Organized By :
International Conferences on Islamic Banking and Finance in Mauritius, 5th-6th April, 2011, Gold Crest Hotel, Mauritius
2
Introduction
cross-border activities open up the new challenges for host and home nations These activities affect the IFI, which is recognized as an institution that accepts different rules but lately gaining acceptance in global financial markets due to the set up of new institutions such as AAOIFI and IFSB, plus research institutions such such as Fiqh Academy, alhuda, ISRA and EKONIS The response from each jurisdiction has been to attempt an Islamic integration into the international financial system and expand the contribution of Islamic finance to real economy How? - by having accounting standards and prudential regulation
3
Continued
in designing and offering new products and services IFI are exposed to several obstacle such as legal origins; differences in rulings; sound and prudent regulations this effort has motivated BNM to deviate from the other regulators by introducing a new guideline Aim of this paper - to explain the creation process in offering new financial products and to identify the parameters in designing those products this paper also will highlight the issues that may arise due to the introduction of those parameters
Reasons
Guidelines on Regulations
Rate of Return
Item 12
Item 13
Item 14
Item 15
Item 16
Board
BNM
Continued
7. Major differences between our current product and this new product 8. Propose date to Launch 9. Risks - The risks need to be identified in relation to this new product and the risk mitigation measures are also stated. 10. Terms and Condition - The legal agreement attached to this product 11. Transparency to Customers 12. Skill, expertise and resources -To brief and trained the related parties such as front line, training and product manager, a legal counsel, and also to address any issues/concern by the staff in understanding the product.
10
Continued
13. Shariah Compliance - Shariah Committees endorsement and decision on the new product with regard to Shariah compliance 14. Risk Management Infrastructure. Approval by the compliance and risk units 15. Accounting and Reporting Treatment 16. Capital Adequacy Requirements .
11
y y y y y y y y y y
To create ijab and qabul To identify the subject matter To identify only the qualified and competent person To demonstrate the intention of the parties to conclude a specific contract. The parties are present to agree on something and it ends when they separate physically To determine the legal ownership To avoid the uncertainty whether they can be delivered or not To determine the nature, quality and quantity To determine the commodity that is capable of being traded To execute or discharge his rights and duties emanating from the contract that he has entered, i.e., to understand the legal consequences of any contract that he has entered into. To understand the transactions (Art 966 of The Mejelle)s
y y
Shariah principles clearly translated into legal language To satisfy the needs of economic agents through various phases of economic activity, right from the purchase or sale of goods, to arrangements for collaterals and guarantees, to arrangements for financing and investment
12
Issues Arise
No Absolute Authority
Maqasaid Syariah
13
A. No Absolute Authority
Therefore, IFIs must seek a review of their products by shariah scholars who judge each case on its merits Our suggestion are: harmonization and convergence in the concepts and application among the shariah committee of IFIs to avoid contradiction or inconsistency between the rulings and application Helping/sharing the developments of shariah approved products and in enabling IFIs to cope with the developments taking place in products and formulas in fields of finance, investment and other banking services
14
15
C. Maqasid al-Shariah
The establishment of IFI is not only to comply the shariah but to achive the objective of shariah (Maqasid Al Shariah). Authors such as Jasser Auda (2010) argues that maqasid al shariah could discussed based on a system approach or institutional approach. if we treat Islamic financial institutions as an institution to perform certain function or as a system (which comprises several agents that behave accordingly). Does the maqasid al shariah will converge in both approaches
16
http://ekonis-ukm.my
Thanks
17