Bank Negara Malaysia issued the Shariah Standards on Bai` al-sarf that took effect in April 2019 aims to promote end-to-end Shariah compliance and sound banking practices, as well as to safeguard consumer interests. In this regard, the Shariah standards sets out salient features and essential conditions of Bai` al-sarf including as well as regulatory and supervisory expectations for the operational requirements on governance and oversight, structuring, risk management and market conduct 

1H2019 continued to see strong issuance activity of global sukuk, with USD87.4 billion issued and the global sukuk market continued its upward trajectory with global sukuk outstanding rose to a record USD466.8 billion. The Global Islamic Asset under Management (AuM) reached USD83.9 billion, an increase of USD6 billion compared to 1H2018 AuM. 

Financial technology, or widely known as Fintech is a technological innovation applied in the provision of financial services. Fintech innovation has become a global trend and started to provide solutions to Islamic finance challenges. In Malaysia specifically, Islamic financial institutions have been incorporating Fintech in their offerings including to have a more efficient and effective way of distributing social finance funds electronically to targeted deserving communities such as waqf and sadaqah and also risk-sharing investment account as alternative funding for SMEs as part of Value-Based Intermediation (VBI) strategies.

Takaful (Islamic insurance) is an arrangement based on mutual assistance under which takaful participants agree to contribute to a common fund providing for mutual financial benefits payable to the takaful participants or their beneficiaries on the occurrence of pre-agreed events.

In Islamic jurisprudence, a waqf is the dedication of a specified asset by a settlor into the administration of a custodian through a legal instrument such that the income or usufruct of that asset benefits a stated beneficiary or is used for a stated purpose.

Islamic banks continued to sustain its growth by recording higher profits of RM9.7 billion while Takaful industry sustained its growth, with family and general takaful recorded growth of 17.7% and 21.3% respectively.

Compliance with Shariah requirements is a prerequisite for ensuring the legitimacy of Islamic financial products and services. Failure to observe the essential conditions of a specific Shariah contract may render the financial transactions entered between an Islamic financial institution and a customer to be invalid. Therefore, it is important to understand the underlying principles of the Shariah contracts.

Value-based Intermediation (VBI) is a new concept of intermediation function aims to re-orient Islamic finance business models towards realising the objectives of Shariah that generate positive and sustainable impact to the economy, community and environment through practices, processes, offerings and conduct. In this month’s epicentre, the MIFC Team has produced an infographic to highlight on the benefits of the VBI on various stakeholders while addressing common misconception on the concept.