191st SAC Meeting (26 March 2019) : Rebate (ibra’) Reduction Mechanism to Partially Recover the Costs in Cashline Financing Product

The SAC of Bank Negara Malaysia at its 191st meeting on 26 March 2019 ruled the following:

Rebate (ibra’) Reduction Mechanism to Partially Recover the Costs in Cashline Financing Product

The SAC has resolved that there is no objection in Shariah on the proposal to reduce the rebate (ibra’) on the unutilised amount for cashline-i facility based on murabahah / tawarruq concept to cover part of the costs incurred by the financier arising from compliance to the Malaysian Financial Reporting Standards 9: Financial Instruments (MFRS 9). However, to promote fair market practices, Bank Negara Malaysia as the authority may determine the appropriate regulatory policy or guideline on the implementation of such mechanism within the Islamic finance industry in Malaysia to ensure that the interest of all parties are considered.

Please refer attachment for more information.