Centre for Shariah Reference in Islamic Finance - Pusat Rujukan Shariah Bagi Kewangan Islam

Overview

The Shariah Advisory Council on Islamic finance of Bank Negara Malaysia (SAC) which was established in May 1997, is the authority for the ascertainment of Shariah law for the purpose of Islamic financial business.

Its scope covers the Islamic banking, takaful, Islamic financial business, Islamic development financial business, or any other businesses, based on Shariah principles which are regulated by Bank Negara Malaysia.

The SAC also serves to advise Bank Negara Malaysia on any Shariah issues relating to Islamic financial business, activities or transactions made by the Bank.

Courts and arbitrators are also required to consider the SAC rulings for any proceedings relating to Islamic financial business concerning on Shariah matters, and such decision shall be binding.

Provisions in Central Banking Act 2009

  1. The Bank may establish a Shariah Advisory Council on Islamic Finance which shall be the authority for the ascertainment of Islamic law for the purposes of Islamic financial business.
  2. The Shariah Advisory Council may determine its own procedures.
  1. The Shariah Advisory Council shall have the following functions:
        1. to ascertain the Islamic law on any financial matter and issue a ruling upon reference made to it in accordance with this Part;
        2. to advise the Bank on any Shariah issue relating to Islamic financial business, the activities or transactions of the Bank;
        3. to provide advice to any Islamic financial institution or any other person as may be provided under any written law; and
        4. such other functions as may be determined by the Bank.
  2. For the purposes of this Part, “ruling” means any ruling made by the Shariah Advisory Council for the ascertainment of Islamic law for the purposes of Islamic financial business.
  1. The Yang di-Pertuan Agong may, on the advice of the Minister after consultation with the Bank, appoint from amongst persons who are qualified in the Shariah or who have knowledge or experience in the Shariah and in banking, finance, law or such other related disciplines as members of the Shariah Advisory Council.
  2. If a judge of the High Court, the Court of Appeal or the Federal Court, or a judge of the Shariah Appeal Court of any State or Federal Territory, is to be appointed under subsection (1), such appointment shall not be made except—
    1. in the case of a judge of the High Court, the Court of Appeal or the Federal Court, after consultation by the Bank with the Chief Justice; and
    2. in the case of a judge of the Shariah Appeal Court of any State or Federal Territory, after consultation by the Bank with the Chief Shariah Judge of the respective State or Federal Territory, as the case may be.
  3. A member of the Shariah Advisory Council appointed under subsection (1) shall hold office on such terms and conditions as may be provided in their respective letters of appointment, and shall be eligible for reappointment.
  4. The members of the Shariah Advisory Council shall be paid such remuneration and allowances as may be determined by the Board from the funds of the Bank.
    1. The Bank may—
    1. establish a secretariat and such other committees as it considers necessary to assist the Shariah Advisory Council in carrying out its functions; and
    2. appoint any officer of the Bank or any other person to be a member of the secretariat or such other committees.
    1. The Bank shall consult the Shariah Advisory Council on any matter—

a. relating to Islamic financial business; and

b. for the purpose of carrying out its functions or conducting its business or affairs under this Act or any other written law in accordance with the Shariah,
which requires the ascertainment of Islamic law by the Shariah Advisory Council.

 

  1. Any Islamic financial institution in respect of its Islamic financial business, may—

a. refer for a ruling; or

b. seek the advice,

of the Shariah Advisory Council on the operations of its business in order to ascertain that it does not involve any element which is inconsistent with the Shariah.

  1. Where in any proceedings relating to Islamic financial business before any court or arbitrator any question arises concerning a Shariah matter, the court or the arbitrator, as the case may be, shall—
    1. take into consideration any published rulings of the Shariah Advisory Council; or
    2. refer such question to the Shariah Advisory Council for its ruling.
  2. Any request for advice or a ruling of the Shariah Advisory Council under this Act or any other law shall be submitted to the secretariat.

Any ruling made by the Shariah Advisory Council pursuant to a reference made under this Part shall be binding on the Islamic financial institutions under section 55 and the court or arbitrator making a reference under section 56.

Where the ruling given by a Shariah body or committee constituted in Malaysia by an Islamic financial institution is different from the ruling given by the Shariah Advisory Council, the ruling of the Shariah Advisory Council shall prevail.