KUALA LUMPUR, Feb 9 — Bank Negara Malaysia (BNM) assured today that it will not follow Qatar’s example in stopping conventional banks from offering Islamic banking services.
“Bank Negara Malaysia has accorded the flexibility to the Islamic financial industry to decide on the strategic business direction of each individual institution,” the central bank said in response to questions from The Malaysian Insider.
Reuters, quoting sources, reported on Monday that Qatar’s central bank had asked conventional lenders to close down their Islamic operations by December 31 amid worries of overlap between the two.
The news agency had said that the “surprise move” was likely to prompt other regions to follow suit.
BNM, however, stressed that banks offering Islamic products and services here were governed by a “robust” syariah framework which ruled out possibility of such an overlap.
The central bank explained that all Islamic banking institutions here have been asked to put in place firewalls and institute segregation of funds to ensure comprehensive syariah compliance in business operations.
BNM added that domestically-owned commercial banks here had also transformed their Islamic services windows into full-fledged Islamic subsidiaries during the 2005-2008 “quantum leap” in the Malaysian Islamic banking industry.
The Economic Transformation Programme (ETP) launched in September last year identified Islamic banking as one of the key sectors expected to contribute to higher, more sustainable economic growth.
According to BNM statistics, Malaysia’s Islamic banking system accumulated a total of RM250 billion in assets or 16.6 per cent of the RM1.5 trillion banking sector as of September 2010.
There are currently 24 players, including local and foreign financial institutions, offering Islamic products and services in Malaysia.