Malaysia tightens Islamic financing contract rules
Kuala Lumpur, May 22, 2014
Malaysia's Securities Commission has tightened rules on bai inah, a popular but divisive Islamic financing contract, in a fresh sign that standards in the world's two main centres for Sharia-compliant banking are slowly converging.
Regulators and scholars in Malaysia and the Gulf have contrasting approaches to Islamic finance - the Gulf tends to be stricter in defining permissible transactions - and so, banks in the region have shunned bai inah.
But under pressure to develop a cross-border industry, authorities in both centres have shown signs of narrowing their differences over the past few years. For example, some Gulf countries have been moving towards centralising supervision of Islamic banks under a single Sharia committee, as Malaysia does.
Treatment of bai inah, which involves the sale and repurchase of an asset, may become another area of convergence. "This will avert any legal risk on the application of inah," said Mohamad Akram Laldin of Malaysia's International Sharia Research Academy for Islamic Finance.-Reuters