The growth of shariah-compliant investment accounts at Malaysian banks will remain strong over the next three to five years, carrying over the trend started in July 2015, as a result of active promotion by the regulator and banks themselves, according to Moody's Investors Service today.
In a statement here, its Vice President/Senior Analyst, Simon Chen, said Malaysian banks have strong incentives to promote the growth of such investment accounts because they provide capital benefits and an additional source of funding to grow their assets.
"At the same time, concerns exist over the untested state of loss-sharing mechanisms in the accounts, although the regulators have instituted safeguards to protect the banks," said Chen.
Moody's conclusions are contained in its just-released report on Islamic banks in Malaysia, "Strong Growth of Investment Accounts Supports Bank Capital and Funding, But Risk-Sharing Mechanism Remains Untested".
The robust growth of shariah-compliant investment accounts in Malaysia began in July 2015 following the implementation of the Islamic Financial Services Act 2013, it said.
It said such accounts are defined in the Act as those under which money is paid and accepted for investment in accordance with Shariah principles and on terms that state there is no express or implied obligation to repay the money in full.
Moody's noted that by February 2017, these accounts had grown to RM74.2 billion, or 13 per cent, of total banking system liabilities, and they will become an increasingly important tool in managing business and income growth, as well as capital adequacy.
On the question of risk, Moody's said, a key issue is whether and to what extent loss-sharing mechanisms in the accounts between the banks and investors will be honoured in case of actual losses.
A significant loss event to test the resilience of this regime has yet to occur, it said.
Moody's concerns is underpinned by its observation that Islamic banks in other Islamic jurisdictions, notably some Gulf Cooperation Council countries, in practice do not exercise the contractual loss-absorbing nature of investment accounts.
This situation is perhaps because of customer expectations and out of fear of reputational damage, and can result in Islamic banks bearing much, or all, of the assets risk on behalf of investment account holders, it said.
However, Moody's said, a mitigating feature for Malaysia is that the regulators have put in place safeguards to protect the banks, such as the segregation of the investment accounts from deposits.
Such safeguards will put Malaysian banks on a strong legal footing for upholding the risk-sharing principle behind these investment products when actual losses arise, it said. -- BERNAMA
Bernama
Mon Apr 10 2017
Moody's said a mitigating feature for Malaysia is that the regulators have put in place safeguards to protect the banks.
5.9 bilion tontonan di TikTok Malaysia direkodkan sepanjang Ramadan, awal Raya
Tiktok Shop dilihat berkembang menjadi tumpuan ramai pengguna untuk membeli barangan, kerana ia turut digayakan dan didemonstrasikan.
Hafizul didakwa cuba bunuh Farah Cie, cederakan pengawal peribadi
Hafizul, 38, mengaku tidak bersalah selepas semua pertuduhan dibacakan terhadapnya di hadapan Hakim.
AWANI Pagi: Khunsa: Merungkai Isu Taboo Menerusi Drama
Khunsa, perihal yang tidak dibincangkan secara terbuka dalam masyarakat. Namun keberanian memaparkan isu ini dalam drama Khunsa, membuka perspektif baharu mengenainya.
Ikuti kupasannya bersama Pengarah, Shahrulezad Mohammeddin dan dua pelakon utama, Azhan Rani serta Nadia Aqilah dalam #AWANIpagi
Ikuti kupasannya bersama Pengarah, Shahrulezad Mohammeddin dan dua pelakon utama, Azhan Rani serta Nadia Aqilah dalam #AWANIpagi
Haiwan peliharaan, terbiar juga boleh diserang strok haba
Bahang cuaca panas lazimnya memberi kesan kepada anjing, kucing dan arnab.
Threads kini mempunyai lebih 150 juta pengguna bulanan
Pengguna telah mula lebih bergiat berkongsi melalui Threads, dan ada yang telah mula hanya menggunakan Threads semata menggantikan Twitter.
Freedom Flotilla to Gaza: Ketegasan Malaysia sekat kapal Israel wajar dicontohi
Walaupun usaha itu dilihat kecil namun ia mampu memberi tekanan kepada rejim Zionis dan menjadi contoh kepada komuniti global.
Juruterbang bomba dihantar ke UAE jalani latihan tambahan secara simulasi
JBPM telah diberikan peruntukan sebanyak RM800,000 untuk menghantar kesemua 17 juruterbang ke negara terbabit.
Lebih 14,000 aduan diterima menerusi aplikasi MYJalan setakat ini - Ahmad Maslan
KKR juga telah menyelesaikan 86 peratus daripada 3,766 aduan diterima menerusi aplikasi itu setakat ini.
AWANI Pagi: Apa Erti Sebenar Cakna Autisme?
Bulan Kesedaran Autisme disambut setiap tahun pada bulan April, untuk meningkatkan kesedaran umum berkenaan diagnosis tersebut. Sejauh mana cakna masyarakat mengenai autisme setakat ini? Ikuti diskusinya dalam Awani Pagi 7.30 pagi Khamis bersama Afiezy Azaman & Azib Zikry.
KPT salur bantuan pendidikan, pengecualian yuran IPT anak mangsa nahas helikopter
KPT melalui PTPTN akan menyalurkan sebanyak RM1,000 seorang kepada 21 anak mangsa nahas dua helikopter yang terhempas di Lumut.