Islamic Banking System In Malaysia

By 2016 that figure had leapt to 28 per cent and the malaysian government hopes to push it over 40 per cent by 2020.

Islamic banking system in malaysia. The islamic financial system in malaysia has witnessed a tremendous growth in demand acceptance and development since its introduction in 1963. Islamic banks and international islamic banks subsist alongside conventional banking institutions and offer a wide range of islamic financial products in any currency to non residents and residents. Malaysia operates a dual banking system namely a conventional banking system operating in tandem with an islamic banking system. Legal set up legal provisions.

Malaysia s determination to become a hub for islamic banking in southeast asia has led the central bank of malaysia to grant licenses to foreign islamic banks to operate in the country. Presently malaysia s islamic banking assets reached usd65 6 billion with an average growth. With the introduction of value based intermediation vbi by bank negara malaysia bnm in 2017 the association of islamic banking and financial institutions malaysia aibim is confident the central bank s target for the local islamic banking industry to have 40 market share in total banking assets by 2020 is achievable. However some distinct differences can be observed.

The banking system comprising commercial banks investment banks and islamic banks is the primary mobiliser of funds and the main source of financing to support economic activities in malaysia. Malaysia s long track record of building a successful domestic islamic financial industry of over 30 years gives the country a solid foundation financial bedrock of stability that adds to the richness diversity and maturity of the financial system. This is carried out through the islamic banking act 1983 for the islamic bank and the banking and financial institutions 1989 for the spi banking institutions. In 2008 islamic banking accounted for 7 1 per cent of malaysia s financial sector.

The banking system in malaysia. It began with the establishment of the malaysian pilgrims fund board tabung haji and the country s first islamic bank bank islam malaysia berhad bimb which began operations on 1 july 1983. Islamic banking services are very similar to those in conventional banks. Kuala lumpur sept 25.

Banking finance and exchange administration 1. Some important components of the present infrastructure of the islamic banking system in malaysia may be summarized as follows.