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

Centre For Shariah Reference in Islamic FinancePusat Rujukan Shariah Bagi Kewangan Islam

MEDIA

187th SAC Meeting (27 August 2018) : Application of Musyarakah Contract in Managing Expense Strain of a Takaful Operator

The Shariah Advisory Council (SAC) of Bank Negara Malaysia at its 187th meeting on 27 August 2018 decided that the application of musyarakah contract between a retakaful operator and takaful operator in managing the expense strain of the latter arising from the implementation of ‘Minimum Allocation Rate’ requirement is permissible, subject to the following conditions:

  1. The musyarakah capital contribution especially in the form of cash, shall not be treated and accounted as an up-front wakalah fee as such treatment is inconsistent with the nature of a musyarakah contract;
  2. The musyarakah capital shall be ring-fenced and shall not commingle with other capital in the shareholders’ fund; and other funds especially the tabarru` fund;
  3. Determination of profit and loss from the musyarakah must reflect the actual profit and loss of the identified portfolio, which must be ring-fenced from other portfolios; and
  4. The in-kind musyarakah capital (if any) must be valued in monetary terms at the inception of the musyarakah contract.

Please refer to the attachment for further information.

186th SAC Meeting (31 July 2018) : Distribution of Takaful Fund’s Surplus in the Event of a Winding Up of a Takaful Operator

186th SAC Meeting (31 July 2018) : Distribution of Takaful Fund’s Surplus in the Event of a Winding Up of a Takaful Operator

The Shariah Advisory Council (SAC) of Bank Negara Malaysia at its 186th meeting on 31 July 2018 decided that the distribution of a takaful fund’s surplus (after meeting all of the takaful participant’s rights and takaful fund’s liabilities) in the event of a winding up of a takaful operator (TO) to the takaful protection fund managed and owned by Malaysia Deposit Insurance Corporation (PIDM) is permissible, provided that such surplus shall first be utilised to cover the deficit of any other takaful funds and the liability of the failed TO.

Please refer to the attachment for further information.

20 Years SAC Celebration

20 Years SAC Celebration

  The Bank Negara Malaysia Shariah Advisory Council (SAC) was established in May 1997 and held its first meeting on 8 July 1997. Over the years, it has played an instrumental role in shaping the development of Islamic finance in…

SAC at Karnival Kewangan Kuching

SAC at Karnival Kewangan Kuching

KUCHING: Bank Negara Malaysia (BNM) and the financial institutions in the country have provided sufficient advisors and experts to ensure the implementation of the Islamic financial system is in accordance with shariah rules. Federal Territories Mufti, Datuk Dr Zulkifli Mohamad…

Transfer of Assets & Performance Guarantees in Istiṣnā’ Contract

Transfer of Assets & Performance Guarantees in Istiṣnā’ Contract

] Istiṣnā’ refers to the contract of sale of assets that have not been constructed, developed or manufactured according to specifications agreed upon by the seller and the buyer. It is usually applied in financing products involving assets that do not yet exist. Istiṣnā’ has not been widely applied in the Islamic finance industry. The reason is that there are obscurity in some of the issues of istiṣnā’s such as property rights issue istiṣnā’ (maṣnū’) in construction as well as customer guarantee issues on contractor’s performance in the istiṣnā’ parallel arrangement (istiṣnā’ muwāzī). In this regard, this paper discusses past debate debates and contemporary scholars on these issues. Shariah-clarity on these raised issues is seen as opening up more space for Islamic financial institutions (IKI) to explore and develop istiṣnā’s based products. This can indirectly encourage the industry’s interest in expanding the application of istiṣnā’s based on the Islamic finance industry

By: Nur Muhammad Sesth Jemahat, Ahmad bin Khairuddin

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Attachment: Working Paper