Qard - Overview

Transcription

1. Qard 1 of 17 PART A OVERVIEW 1 . Introduction 1.1 Compliance with Shariah requirements 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 to establish a sound operational framework and infrastructure to ensure that its conduct of Islamic financial transactions is consistent with Shariah. 1.2 The Shariah contract-based regulatory policy is intended to promote consistency of Shariah contract application in Islamic financial products and services. This policy is envisaged to strengthen legal certainty and Shariah compliance practices by an Islamic financial institution. 1.3 This policy document aims to– (a) provide reference on the Shariah rulings applicable to qard; (b) set out key operational requirements for the implementation of qard; and (c) promote end-to-end compliance with Shariah requirements, which further promote sound Islamic banking and takaful practices and safeguard consumer interests. 1.4 This policy document sets out the following: (a) salient features and essential conditions of qard in Part B; and (b) regulatory and supervisory expectations for the operational requirements on governance and oversight, structuring, risk management, business and market conduct as well as financial disclosure in Part C. 1.5 This policy document also sets out the requirements for the revision of wadi`ah yad dhamanah involving a fungible asset to qard, subject to the transition period. 2. Applicability 2.1 This policy document is applicable to Islamic financial institutions as defined in paragraph 5.2. 3. Legal provisions 3.1 The requirements in Part B of this policy document are specified pursuant to– (a) section 29(1) of the Islamic Financial Services Act 2013 (IFSA); and (b) section 33E(1) of the Development Financial Institutions Act 2002 (DFIA). 3.2 The requirements in Part C of this policy document are specified pursuant to– (a) sections 29(2), 57, 135(1) and 155 of IFSA; and (b) sections 33E(2), 41, 42C(1) and 116 of the DFIA. Issued on: 26 February 2018
2. Qard 3 .3 2 of 17 The guidance in this policy document is issued pursuant to section 277 of the IFSA and section 126 of the DFIA. 4. Effective date 4.1 This policy document comes into effect on 31 July 2018, except for paragraph 22, which takes effect immediately upon issuance of this policy document. 4.2 The Bank is committed to ensure that its policies remain relevant and continue to meet the intended objectives and outcome. Accordingly, the Bank will review this policy document within 5 years from the date of issuance or the Bank’s latest review, and where necessary, amend or replace this policy document. 5. Interpretation 5.1 The terms and expressions used in this policy document must 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. 5.2 For the purpose of this policy document– “S” denotes a standard, an obligation, a requirement, specification, direction, condition and any interpretative, supplemental and transitional provisions that must be complied with. Non-compliance may result in enforcement actions; “G” denotes guidance which may consist of statements or information, intended to promote common understanding and advice or recommendations that are encouraged to be adopted; “direct costs” refers to costs that are directly related to the qard transaction, either based on actual or estimated amount, without any profit or mark-up element; “contractual benefit” refers to any form of incentives, gifts, privileges or benefits that the borrower is legally bound to give to the lender under the qard contract or any other contracts that relate exclusively to the qard; “Islamic financial institution” (IFI) refers to– (a) a licensed Islamic bank; (b) a licensed takaful operator and professional retakaful operator; (c) a licensed bank and licensed investment bank approved under section 15(1)(a) of the FSA to carry on Islamic banking business; and (d) a prescribed institution approved under section 33B(1) of the DFIA to carry on Islamic financial business. 5.3 A glossary of terms used in this policy document is set out in Appendix 2. Issued on: 26 February 2018
3. Qard 3 of 17 6 . Related legal instruments and policy documents 6.1 This policy document must be read together with other relevant legal instruments and policy documents that have been issued by the Bank. Issued on: 26 February 2018