Bank Negara releases draft of governance measures for Islamic FIs

Bank Negara said key enhancements to the framework comprised strengthening board oversight on accountability and responsibilities over Shariah governance and enhancing requirements for the Shariah committee in providing objective and sound advice to Islamic financial institution. — Picture by Yusof Mat Isa
Bank Negara said key enhancements to the framework comprised strengthening board oversight on accountability and responsibilities over Shariah governance and enhancing requirements for the Shariah committee in providing objective and sound advice to Islamic financial institution. — Picture by Yusof Mat Isa

KUALA LUMPUR, Nov 13 — Bank Negara Malaysia (BNM) has released an Exposure Draft aimed to enhance existing regulatory requirements and expectations on Shariah governance for Islamic financial institutions.

“The draft aims to strengthen the effectiveness of Shariah governance implementation within Islamic financial institutions due to the growing scale and complexity of Islamic financial business alongside recent policy developments in the area of governance, compliance and risk management,” BNM said on its website.

It said key enhancements to the framework comprised strengthening board oversight on accountability and responsibilities over Shariah governance and enhancing requirements for the Shariah committee in providing objective and sound advice to Islamic financial institutions, in line with the Islamic Financial Services Act 2013.

The central bank said other improvements included enhancing expectations for the board and senior management to promote a Shariah-compliant culture and further integrate Shariah governance considerations in business and risk strategies, and improving the quality of internal control functions to ensure effective management of Shariah non-compliance risks.

“The bank invites written feedback on the proposed regulatory requirements, including suggestions and alternative proposals,” it said.

Responses must be submitted to BNM by Dec 11, 2017 to shariahgovernan[email protected], it added. — Bernama

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