Sunday, August 22, 2010
Central Bank of Malaysia Act 2009
Bank Negara Malaysia is pleased to announce that the Central Bank of Malaysia Act 2009 (The Act) has come into force today (25 November 2009). With this, the Central Bank of Malaysia Act 1958 is repealed and thus, ceases to apply. The Act will enable Bank Negara Malaysia to more effectively manage emerging risks and challenges in performing its role and responsibilities as the nation's central bank. The Act clarifies the roles of BNM and provides necessary powers and instruments to execute the responsibilities and achieve intended goals.
Consistent with the goal to promote Malaysia as an international centre for Islamic finance, the Act gives due recognition to the Islamic financial system in Malaysia. The Act also provides for an enhanced role of the Syariah Advisory Council (SAC) on Islamic Finance to facilitate consistent application of Islamic law on Islamic financial matters.
PART VI - Chapter 1 - Powers for promoting financial stability
27. The financial system in Malaysia shall consist of the conventional financial system and the Islamic financial system.
PART VII - Chapter 1 – Shariah Advisory Council (SAC)
51. Establishment of SAC
1. The Bank may establish a SAC on Islamic Finance which shall be the authority for the ascertainment of Islamic law for the purposes of Islamic financial business.
2. The SAC may determine its own procedures.
52. Functions of SAC
1. The SAC shall have the following functions:
a) to ascertain the Islamic law on any financial matter and issue a ruling upon reference made to it in accordance with this Part;
b) to advise the Bank on any Shariah issue relating to Islamic financial business, the activities or transactions of the Bank;
c) to provide advice to any Islamic financial institution or any other person as may be provided under any written law; and
d) such other functions as may be determined by the Bank.
2. For the purposes of this Part, “ruling” means any ruling made by the SAC for the ascertainment of Islamic law for the purposes of Islamic financial business.
53. Appointment of members to SAC
1. The Yang di-Pertuan Agong may, on the advice of the Minister after consultation with the Bank, appoint from amongst persons who are qualified in the Shariah or who have knowledge or experience in the Shariah and in banking, finance, law or such other related disciplines as members of the SAC.
2. If a judge of the High Court, the Court of Appeal or the Federal Court, or a judge of the Shariah Appeal Court of any State or Federal Territory, is to be appointed under subsection (1), such appointment shall not be made except—
a) in the case of a judge of the High Court, the Court of Appeal or the Federal Court, after consultation by the Bank with the Chief Justice; and
b) in the case of a judge of the Shariah Appeal Court of any State or Federal Territory, after consultation by the Bank with the Chief Shariah Judge of the respective State or Federal Territory, as the case may be.
3. A member of the SAC appointed under subsection (1) shall hold office on such terms and conditions as may be provided in their respective letters of appointment, and shall be eligible for reappointment.
4. The members of the SAC shall be paid such remuneration and allowances as may be determined by the Board from the funds of the Bank.
54. Secretariat to SAC
The Bank may—
a) establish a secretariat and such other committees as it considers necessary to assist the SAC in carrying out its functions; and
b) appoint any officer of the Bank or any other person to be a member of the secretariat or such other committees.
55. The Bank and Islamic financial institutions to consult SAC
1. The Bank shall consult the SAC on any matter—
a) relating to Islamic financial business; and
b) for the purpose of carrying out its functions or conducting its business or affairs under this Act or any other written law in accordance with the Shariah,
which requires the ascertainment of Islamic law by the SAC.
2. Any Islamic financial institution in respect of its Islamic financial business, may—
a) refer for a ruling; or
b) seek the advice,
of the SAC on the operations of its business in order to ascertain that it does not involve any element which is inconsistent with the Shariah.
56. Reference to SAC for ruling from court or arbitrator
1. Where in any proceedings relating to Islamic financial business before any court or arbitrator any question arises concerning a Shariah matter, the court or the arbitrator, as the case may be, shall—
a) take into consideration any published rulings of the SAC; or
b) refer such question to the SAC for its ruling.
2. Any request for advice or a ruling of the SAC under this Act or any other law shall be submitted to the secretariat.
57. Effect of Shariah rulings
Any ruling made by the SAC pursuant to a reference made under this Part shall be binding on the Islamic financial institutions under section 55 and the court or arbitrator making a reference under section 56.
58. SAC ruling prevails
Where the ruling given by a Shariah body or committee constituted in Malaysia by an Islamic financial institution is different from the ruling given by the SAC, the ruling of the SAC shall prevail.
PART VII - Chapter 2 – Powers of the bank
59. The Bank to issue circulars, guidelines, etc., on Shariah matters
1. The Bank may issue such written circulars, guidelines or notices on any Shariah matter relating to the Islamic financial business carried on by any Islamic financial institution in accordance with the advice or ruling of the SAC.
2. An Islamic financial institution shall comply with any written circulars, guidelines or notices issued by the Bank under subsection (1) and within such time as may be set out in the circulars, guidelines or notices. 53 Central Bank of Malaysia
3. Any person who fails to comply with any circulars, guidelines or notices issued by the Bank under subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding three million ringgit.
60. Promotion of Malaysia as an international Islamic financial centre
1. The Bank shall, in co-operation with the Government or any Government agency, statutory body, supervisory authority or international or supranational organization, develop and promote Malaysia as an international Islamic financial centre.
2. For the purposes of subsection (1), the Bank may—
a) establish a secretariat or other committees to assist the Government or any organization, council, agency or committee established by the Government; and
b) generally take such measures or facilitate such actions or provide financing,
as may be necessary for the development and promotion of Malaysia as an international Islamic financial centre.