Mudarabah - Overview

Transcription

1. BNM /RH/STD 028-8 PART A Mudarabah Islamic Banking and Takaful Department Page 1/64 OVERVIEW 1. Introduction 1.1 Compliance with Shariah requirement is a prerequisite in ensuring the legitimacy and integrity of Islamic financial products and services. In meeting this expectation, it is essential for an Islamic financial institution (IFI) to establish the necessary operational framework and infrastructure to ensure that the conduct of Islamic financial transactions is consistent with Shariah. 1.2 The Shariah contract-based regulatory policy is intended to promote transparency and consistency of Shariah contract application which would enhance the contracts’ certainty and strengthen Shariah compliance by IFIs. 1.3 The Shariah contract-based regulatory policy consists of two components, namely the Shariah and the operational requirements. The Shariah requirements highlight the salient features and essential conditions of a specific contract. The latter outlines the core principles underpinning good governance and oversight, proper product structuring, effective risk management, sound financial disclosure and fair business and market conduct. The operational requirements aim to complement and promote sound application of the Shariah principles. 1.4 Mudarabah is a contract based on a fiduciary relationship between a capital provider (rabbul mal) and an entrepreneur (mudarib). Under a mudarabah, any profit generated from the capital is shared while financial losses are borne by the rabbul mal. Issued on: 20 April 2015
2. BNM /RH/STD 028-8 Islamic Banking and Takaful Department 2. Policy objectives 2.1 This policy document aims to: Mudarabah Page 2/64 (a) provide reference on the Shariah rulings associated with mudarabah; (b) set out key operational requirements with regard to the implementation of mudarabah; and (c) promote end-to-end compliance with Shariah requirements which include adherence to sound banking practices and safeguarding customers’ interest. 3. Scope of policy document 3.1 Part B provides mandatory Shariah requirements to ensure the validity of mudarabah and its optional practices. 3.2 Parts C and D provide operational requirements on governance and oversight, structuring, risk management, financial reporting and business and market conduct. Part C provides the operational requirements on the mudarabah where the IFI is a mudarib and/or the rabbul mal of the mudarabah venture, while Part D provides specific operational requirements where the IFI is the rabbul mal. 4. Applicability 4.1 This policy document is applicable to: (a) all IFIs as defined in paragraph 7.2. Notwithstanding this, licensed takaful operators under the Islamic Financial Services Act 2013 (IFSA) shall only apply Part B of this policy document. (b) 1 all financial products and services structured on mudarabah, except for: (i) sukuk, collective investment schemes and equities; and (ii) interbank investments1, which are excluded from Part D. Islamic Negotiable Instruments (INIs) based on mudarabah are also excluded . Issued on: 20 April 2015
3. BNM /RH/STD 028-8 Mudarabah Islamic Banking and Takaful Department 5. Legal provisions 5.1 The requirements in this policy document are: (a) Page 3/64 specified pursuant to sections 29(1) and (2), 57(1), 135(1) and 277 of the Islamic Financial Services Act 2013 (IFSA); and (b) specified pursuant to sections 41(1) and 126 and issued as a direction pursuant to section 129(3) of the Development Financial Institutions Act 2002 (DFIA). 6. Effective date 6.1 This policy document comes into effect as follows: (a) Part B, immediately upon issuance of this policy document; and (b) Part C and D, on 1 June 2016. 7. Interpretation 7.1 The terms and expressions used in this policy document shall have the same meanings as assigned under the Financial Services Act 2013 (FSA), IFSA and DFIA, as the case may be, unless otherwise defined in this policy document. 7.2 For the purpose of this policy document: “S” denotes a standard, requirement or specification that must be complied with. Failure to comply may result in one or more enforcement actions; “G” denotes guidance which consist information, advice or recommendation intended to promote common understanding and sound industry practices which are encouraged to be adopted; “Islamic financial institution” or “IFI” means: (a) a licensed Islamic bank under the IFSA; (b) a licensed takaful operator under the IFSA; (c) a licensed bank and licensed investment bank under the FSA approved under section 15(1)(a) of the FSA to carry on Islamic banking business; Issued on: 20 April 2015
4. BNM /RH/STD 028-8 Islamic Banking and Takaful Department Mudarabah Page 4/64 and (d) a prescribed institution under the DFIA approved under section 129(1) of the DFIA to carry on Islamic banking business or Islamic financial business. 7.3 A glossary of terms used in the policy document is set out in Appendix 2. 8. Related Shariah rulings and policy documents 8.1 This policy document must be read together with but not limited to such Shariah rulings and policy documents as specified in Appendix 3. 9. Policy documents superseded 9.1 This policy document supersedes the requirements for mudarabah in the: (a) Guidelines on Musharakah and Mudarabah contracts for Islamic Banking Institutions issued on 15 September 2007 as at the effective date of part C and D of this policy document; and (b) Shariah Standard on Mudarabah issued on 22 October 2012. Remainder of this page is intentionally left blank Issued on: 20 April 2015