An Overview On The Implication Of Enforcement Of Islamic Financial Services Act 2013 On The Islamic Product Operation
Supervision of the Islamic banking institutions has been strengthened with the enactment of the Islamic Financial Services Act 2013 that provides for enhanced, prudent and comprehensive legal framework to govern and ensure financial stability and full shariah compliance by Islamic banking institutions. The direct impact from the introduction of this regulatory framework is on the classification of funds into deposit and investment account based on the product features depending on the underlying shariah contracts applied. In line with this requirement, Bank Negara Malaysia has issued Investment Account Policy, besides the issuance of shariah standards, that stipulated the relevant parameters related to the investment products. This research aimed to look at the implication to the operations of Islamic banking product pursuant to the new legislation. Information related to the research area are gathered and referred from the published documents, articles, journals and other relevant publications based on the qualitative research methodology. The research revealed that the enactment of the new act has a positive impact as the Islamic banking institutions are forced to enhance the competencies and internal capabilities to cater for the new requirements, particularly on the operation of the investment accounts given the issues related to customers’ acceptance. Notwithstanding, the biggest challenge faced by the Islamic banking institutions is addressing the uncertainties in terms of profit and loss as well as the risk of losing the capital which obstructed the subscription and involvement of Islamic banking institutions and customers in this product offering. In addition, constricted regulatory requirements coupled with the practice of dual banking system had also contributed to the determent in the implementation of investment accounts in the market.
Keywords: Banking, act, financial, Islam, account.