Shariah Advisory Council of Bank Negara Malaysia Issues Rulings on Loan Restructuring and Profit Compounding

Bank Negara Malaysia (BNM) has published its’ Shariah Advisory Council’s latest rulings regarding the restructuring of Islamic financing facilities amidst COIVD-19, on its website, along with its guidelines for profit compounding upon restructuring.

According to BNM guidelines, an Islamic financing facility may be restructured based on the original Shariah contract, without the need for a new agreement, by using a supplementary agreement that is cross-referred to the terms and conditions prevalent in the original agreement.

BNM added that a new agreement is only required if the restructuring results in the conversion to a different Shariah contract, such as an original...