KUALA LUMPUR (Reuters) - Malaysia is in the final stages of introducing a new legislation for Islamic banking and takaful products, the country’s central bank governor said on Wednesday, which gives a stronger legal basis to contracts devised by financial institutions.
Governor Zeti Akhtar Aziz did not give a time frame for launch of the legal framework. She said the legislation will help the Malaysian central bank better regulate and supervise the Islamic finance industry, which globally is valued at $1.3 trillion (800 billion pounds).
“The legal, regulatory and supervisory framework will need to be adjusted to accord greater clarity to the appropriate legal and regulatory treatment,” said Zeti said in a speech delivered in Jakarta on Wednesday.
The new framework will streamline the legal requirements across the Islamic finance industry, where there is a current lack of clarity that potentially hinders its growth ambitions.
Malaysia’s Islamic banks are looking to compete with conventional lenders in attracting mainstream customers, which goes towards doubling their share of the country’s total banking assets to 40 percent by 2020 from about 20 percent presently.
Malaysia’s Islamic finance industry is currently valued at $144 billion.
Reporting By Al-Zaquan Amer Hamzah; Editing by Niluksi Koswanage