CURRENT ISSUES IN INTERNATIONAL AND OFFSHORE BANKING (GB30403) PROJECT TITLE:FUTURE PROSPECTS OF ISLAMIC FINANCIAL INSTITUTIONS IN MALAYSIA

GROUP NAME: ANA IVANOVIC (RANKED 14TH WTA)

In the name of Allah, the most Beneficent, the Most Merciful.

SCOPE OF STUDYThis study explores and analyses the future prospect of Islamic

financial institution in Malaysia by highlighting a few main areas of Islamic finance such as principles and Islamic finance products. Beside that, we also had see the role and function of Islamic financial institution in Malaysia from the past success and determines the opportunities and challenges that will effect the future prospect of Islamic financial institution.

OBJECTIVES a) To examine the principles and products of Islamic finance with the growth of Islamic financial institutionb) To study the role and functions of Islamic financial institution in Malaysiac) To investigate the opportunities and challenges that effect Islamic financial institution

ALL BUSINESSES

Banks, Financial Institution and Other businesses

Financial Institutions

All Banks

Islamic

Banks

Islamic Financial Institutions

Islamic Financial Institution

Consumers

Islamic FinancialInstitution

Government

Central Bank

Staff Sponsors

Management

External

Internal

Legal Framework

Demand for Products & Services

Vision & Leadership

Capital

Regulations/Policies guidelines

Shariah Adviser/Shariah Board

Madrasas/

Religious Scholars

Shariah supervision

Public opinion/Religious Rulings

Productivity

Principles of Islamic Finance

Any predetermined payment over and above the actual amount of principal is prohibited.

The lender must share in the profits or losses arising out of the enterprise for which money was lent.

Making money from money is not acceptable by Islamic law. Money is only a medium of exchange, and therefore should not be allowed to give rise to more money, via fixed interest payments, simply by being put in a bank or lent to someone else.

Gharar (uncertainty, risk or speculation) is also prohibited.

Investments should only support practices or products that are not forbidden (or discouraged) by Islam.

Islamic financial productsProfit sharing financial productsAdvance purchase financial productsDeposit productsInsurance productsSukuk

Role and Functions of Islamic Financial Institution in Malaysia

Government Regulations and Incentives.

Islamic OrganizationEducationCooperation Between

Countries.Banking.

Challenges and Opportunities in Islamic Financial Institution

Need to develop products, services and standards in line with the times.

Exploring new marketsCooperation with various

institutions

Future Prospect of Islamic Financial Institution

Legal, Shariah & Reg

Institutional development

Product & market

Knowledge and education

• Comprehensive legislation

• Dispute resolutiono Dedicated high

courto Arbitration centreo Financial

Mediation Bureau• Tax neutrality policy• Shariah Advisory

Council and its governance

• International best practices - IFSB

• Comprehensive product range in banking, takaful & financial markets

• Global sukuk - sovereign & multilateral institutions

• Consumer Education & Awareness Programmes

• Complete training infrastructureo INCEIF, IBFIM & ICLIF

• International conferences

• Domestic & foreign Islamic banks, Islamic banking windows

• Islamic capital market players

• Fund for Shariah Scholarso Promote Shariah

dialogues o Scholarshipo Research grant

• Offshore players• Liberalised equity policy for

Islamic subsidiaries and takaful