The legal and regulatory aspects of islamic banking pdf

As islamic banking has spread, there has been increasing debate about whether specific. Legal and regulatory aspects of islamic banking other. Islamic law or sharia as revealed in and derived from the. Yet at the same time it is always subject to the law of the particular financial market in which it operates. The islamic banking regulatory framework cbo circular ib 1 of 2012 permits incorporation of fullyfledged islamic banks as well as islamic windows comprehensive framework for islamic finance includes, licensing regime, corporate governance obligations, accounting and auditing standards, capital adequacy requirements, etc. Can there be such a thing as an islamic commercial bank operating within the prevalent monetary and banking system. However, on the other hand, matters relating to finance is expressly stated to fall under the federal. The key regulator for the banking system in india is the reserve bank of india rbi. The international monetary fund the fund is increasingly encountering islamic banking related issues in its surveillance work and technical assistance. Pdf legal and regulatory issues of islamic finance in australia. Padhi legal aspects of business ravinder kumar legal aspects 2018 legal aspects legal aspects in sales and marketing pdf legal aspects of code administration legal and regulatory aspects of banking pdf icc legal aspects of code administration international banking legal. Islamic finance is a rapidly growing stream in the halal economy. Islamic banking, sharia, finance, regulatory organizations.

Pdf legal and regulatory issues of islamic finance in. Shariah provides guidelines for aspects of muslim life, including religion, politics, economics, banking, business, and law. In turn, under the heading related to the areas of islamic banking, there were subheadings on general. May 11, 2011 buy the legal and regulatory aspects of islamic banking. It is my great pleasure to speak at this 4th ifsb seminar on legal issues in the islamic financial services industry that has brought together so many international experts and industry practitioners to discuss legal issues in islamic finance. In turn, under the heading related to the areas of islamic banking, there were subheadings on general and financial information, legal framework, regulatory and. Arguably the islamic finance system has become an accepted phenomenon in the international financial system. Islamic banking practices from the golden age of islam nasser 1996, p. Overview and policy concerns congressional research service 1 background islamic finance is based on shariah, an arabic term that often is translated to islamic law. May 23, 2012 the book explores company, contract, and some elements of tax law and traces the impact it has had on the development of islamic banking in the uk, before going on to argue that the current legal and regulatory framework which affects the islamic banking sector has on certain occasions had an unintended adverse impact on islamic banking in the uk.

The discussion in class covers legal aspect of an institution and mechanism of islamic bank. Although islamic economics is still in its early stages of development as an academic discipline, there is a constant flow of useful and valuable literature on. Review of the fundamental features of islamic banking. Unlike legal systems that are limited to secular aspects of daily life, shariah jurisprudence does not distinguish between religious and other aspects of life, 3 as of april 2015, the accounting and auditing organization for islamic financial institutions aaoifi has. Banking laws and regulations india global legal insights.

A comparative look at the united kingdom and malaysia routledge research in finance and banking law 1 by aldohni, abdul karim isbn. The growth and development of islamic banking industry are supported through goods governance and its comprehensive legal frameworks. In theory, however, islamic and conventional banking differ in important ways. The most important issue in this context is the lack of a welldefined reg. Islamic capital market4 an effective legal, regulatory and supervisory framework provides the essential foundation for the functioning of a modern capital market. Given that in islamic banking returns on investments are based on underlying economic activities andor assets that structure the contractual relationship between transacting parties, it is possible to use the assetsharing aspects of islamic based nature and risk. The current debate on regulatory issues reflects a variety of approaches. This achievement adheres much on the comprehensive approach of the authorities as well as the players themselves especially to its legal aspects. A detailed examination of the global banking laws and regulatory systems that govern islamic finance show more from iran, where all banking is shariah compliant, to malaysia and the gulf, where islamic financial institutions compete with conventional banks, rodney wilson examines how islamic financial institutions are licensed and governed by. The legal and regulatory aspects of islamic banking a. These guidelines aimed to facilitate the development of. This is due to the existing legal, regulatory and supervisory system of australia that is exclusively made to control and supervise its conventional banking system, in addition to what the islamic.

A critical evaluation of the legal and sharia aspects of the. Social dynamics of the debate on default in payment and sale of debt. The legal and regulatory framework of islamic banking in. Ethical and regulatory aspects of clinical research. The act provides the legal premise for a comprehensive regulatory framework for islamic finance in malaysia. Given that in islamic banking returns on investments are based on underlying economic activities and or assets that structure the contractual relationship between transacting parties, it is possible to use the assetsharing aspects of islamic based nature and risk. Islamic financial products are designed to encompass these aspects. Much less emphasis has been placed on understanding the regulatory and financial environment in which the lif is formed and practiced. This book takes a muchneeded and comprehensive look at the legal and regulatory aspects which affect islamic finance law, and examines the current uk and international banking regulatory frameworks which impact on this sector. It comes as no surprise that potential endusers of islamic finance, both in the public and private sectors, when given a choice, will often favor conventional over. The rbi is the central bank of india, and the primary regulatory authority for banking. A comparative look at the united kingdom and malaysia. The case study of the mozambican regulatory framework, international journal of law and management, vol.

Kabir hassan executive summary this article examines current legal and regulatory issues of islamic banking in bangladesh. Ethical, regulatory, global, and corporate issues the legal environment today. The recent unprecedented rapid growth of islamic financial system is gradually changing the status of the islamic banking system as an alternative to the conventional counterpart to a mainstream contender. Traditional aspects of modern commercial banking and capital markets practices have existed for many decades, but modern islamic finance isin relative termsvery new and niche. Islamic finance has shown continuous strong growth, not only in terms of deposits and assets, but also in market share.

The legal framework of the islamic financial system 89 may, the clauses islamic law and islamic law and doctrine, are open to interpretation and as such, arguably it may include matters relating to islamic finance. An entity intending to carry out banking business in india must obtain a licence from the rbi. Islamic finance 2014 the cfa institute research foundation 3 discusses islamic economic thought and highlights its pertinence for islamic finance, explains the major elements of islamic law and prohibitions concerning islamic finance, addresses the use of nominate contracts and promises in structuring islamic finance products, touches on regulatory issues. The beliefs of islam encompass all aspects of a muslims life, determining the articles of their faith and the relationships between man and god, and between human beings. This bibliography was generated on cite this for me on monday, may 7, 2018.

Shariah principles prohibit interest known as riba, gambling maisir and uncertainty or speculation gharar. Islamic banking in malaysia, the malaysian case study. The puzzle and the challenge of developing rf banking and financing 227 legal and financial categories 227. Pdf shariah and law in relation to islamic banking and. Regulation and performance of islamic banking in bangladesh abu umar faruq ahmad m. Iium institute of islamic banking and finance iiibf malaysia. The central bank and the regulatory shariaa compliance committee 81 vi contents. Legal, regulatory and governance issues in islamic finance. Presented at the sixth harvard university forum on islamic finance, may 89, 2004.

The current debate on regulatory issues reflects a. Contractbased regulatory framework for islamic finance. Islamic financial sector islamic only in form, not in substance. He also holds a bachelor in islamic law from university of sharjah, uae. Banker can refuse opening ac for undesirable persons.

Dec 14, 2012 regulatory framework9 in line with its vigorous effort to provide facilitative regulatory environment for the development of the islamic capital market, the securities commission introduced the following regulatory framework. Pdf shariah and law in relation to islamic banking and finance. It gave more autonomy to the cbn in carrying out its financial regulatory. The legal and regulatory aspects of islamic banking. The basics of islamic banking islamic financial institutions offer banking products that comply with the shariah principles. Table of contents 9 chapters table of contents 9 chapters islamic financial markets. Hence, this article tries to explore the effectiveness of the existing legal framework of islamic banking in malaysia. Due to its universal growing acceptance and popularity many countries are. Accordingly, the islamic banking industry of iraq is regulated by conventional laws and this may result ultimately in legal problems for the islamic banking system. Legal aspects of business pdf legal aspects of business legal aspects of business by p. As malaysia is one of the common law countries, it is very essential to have standard law of practice, which. Regulation and performance of islamic banking in bangladesh. At this stage recent studies agreed that putting in place an appropriate and effective legal. Will following the legal minimum of islamic commercial jurisprudence by commercial financial institutions lead to fulfillment of the higher objectives of islam.

A critical evaluation of the legal and sharia aspects of. A comparative look at the united kingdom and malaysia routledge research in finance and banking law. Islamic finance is a method of banking or financing activities that are based on the sharia law and operated by sharing the risk. Given the importance of islamic banking in a number of countries, the fund is expected to help identify, assess, monitor, and report. The possible inclusion of legal provisions in islamic banking. Islamic banking industry locally as well as internationally. In this context, the lack of a comprehensive islamic banking legal framework and unclear relationship between the cbi and islamic banks are the two main legal problems. The extant literature concerning the law of islamic finance lif is dominated by illustrations of islamic financial contracts and critiques of the way in which the sharia has been circumvented. A comparative look at the united kingdom and malaysia routledge research in finance and banking law the legal environment of business. Download citation the legal and regulatory aspects of islamic banking. Countries like malaysia, bahrain, and oman have developed separate legal and regulatory frameworks for islamic banks to follow, while qatar has aimed to separate islamic banking from conventional banking by banning islamic windows within conventional branches in the country. They also determine their moral and behavioural code, as well as giving the framework for their daily activities.

These are the sources and citations used to research legal and regulatory aspects of islamic banking. The sharia challenge faced by the islamic banking industry in iraq is the lack of a proper sharia framework. A comparative look at the united kingdom and malaysia during the last ten years the. The possible inclusion of legal provisions in islamic. His research interests are primarily focused on financial law, law of islamic finance and regulatory and legal aspects of developing islamic financial markets. Pdf purpose the purpose of this paper is to contribute to the existing body of work in the area. The application of islamic banking under the conventional banking regulation of the united kingdom. This trend continued in the 1950s and 1960s, when the first islamic banks in the modern history were. Legal and regulatory issues and challenges inhibiting.