Musyarakah - Overview

Transcription

1. BNM /RH/STD 028-7 PART A Islamic Banking and Takaful Department Musyarakah Page 1/71 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 principle. 1.4 Musyarakah is a partnership between two or more parties, whereby all contracting parties contribute capital to the musyarakah venture and share the profit and loss from the partnership. Issued on: 20 April 2015
2. BNM /RH/STD 028-7 2. Policy objectives 2.1 This policy document aims to: (a) Musyarakah Islamic Banking and Takaful Department provide reference on the Shariah Page 2/71 rulings associated with musyarakah; (b) set out key operational requirements with regard to the implementation of musyarakah; 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 musyarakah 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 for musyarakah venture, while Part D is on musyarakah financing. 4. Applicability 4.1 This policy document is applicable to: (a) all IFIs as defined in paragraph 7.2. Notwithstanding this, licensed takaful operator under the Islamic Financial Services Act 2013 (IFSA) shall only apply part B of this policy document; (b) all financial products and services structured on musyarakah, except for: Issued on: (i) sukuk, collective investment schemes and equities; and (ii) interbank investments, which are excluded from Part C and D. 20 April 2015
3. BNM /RH/STD 028-7 Islamic Banking and Takaful Department Musyarakah 5. Legal provisions 5.1 The requirements in this policy document are: (a) Page 3/71 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 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 adoption of 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; and Issued on: 20 April 2015
4. BNM /RH/STD 028-7 (d) Islamic Banking and Takaful Department Musyarakah Page 4/71 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 this 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 document superseded 9.1 This policy document supersedes the requirements for musyarakah in the Guidelines on Musharakah and Mudarabah contracts for Islamic Banking Institutions issued on 15 September 2007 as at the effective date of this policy document. Remainder of this page is intentionally left blank Issued on: 20 April 2015