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LAWS OF MALAYSIA
Act 276
9-Mar-1983
10-Mar-1983
PU(B) 182/1983
ARRANGEMENT OF SECTIONS
PART I
PRELIMINARY
1. Short title, commencement and application.
2. Interpretation.
PART II
LICENSING OF ISLAMIC BANKS
3. Islamic banking business to be transacted only by a licensed
Islamic bank.
4. Minister may vary or revoke condition of licence.
5. Licence not to be granted in certain cases.
6. (Deleted).
7. Opening of new branches.
8. Islamic bank may establish correspondent banking
relationship with bank outside Malaysia.
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9. Licence fee.
10. Restriction of the use of certain words in an Islamic banks
name.
11. Revocation of licence.
12. Effect of revocation of licence.
13. Publication of list of Islamic banks.
13A. Advice of Syariah Advisory Council.
PART III
FINANCIAL REQUIREMENTS AND DUTIES OF
ISLAMIC BANKS
14. Maintenance of capital funds.
15. Maintenance of reserve funds.
16. Percentage of liquid assets.
17. Auditor and auditors report
18. Audited balance sheet.
19. Statistics to be furnished.
20. Information on foreign branches.
PART IV
OWNERSHIP, CONTROL AND MANAGEMENT OF
ISLAMIC BANKS
21. Information on change in control of Islamic banks.
22. Sanction for reconstruction, etc., of bank required.
23. Disqualification of directors and employees of banks.
PART V
RESTRICTIONS ON BUSINESS
24. Restrictions on payment of dividends and grant of advances
and loans.
25. Prohibition of loans, etc., to directors, officers and
employees.
26. Restriction on grant of loan, advance or credit facility under
section 25 (4).
27. Restriction of credit to single customer.
27A. Control of credit limits.
28. Disclosure of interests by directors.
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MISCELLANEOUS
44. Indemnity.
45. Priority of Islamic deposits.
46. Penalties on directors and managers.
47. Offences by directors, employees and agents.
48. Offences by companies, etc.,and by servants and agents.
49. Prohibition on receipt of commission by staff.
50. General penalty.
51. Power of Governor to compound.
52. Consent of the Public Prosecutor.
53. Regulations.
53A. Power to issue guidelines, etc.
54. Bank holidays.
55. Application of other laws.
56. Exemption.
PART VIII
CONSEQUENTIAL AMENDMENTS
57. Amendment of Banking Act 1973.
58. Amendment of Companies Act 1965.
59. Amendment of Central Bank of Malaysia Ordinance 1958.
60. Amendment of Finance Companies Act 1969.
PART I
PRELIMINARY
Short title, 1. (1) This Act may be cited as the Islamic Banking Act
commencement and 1983 and shall come into force on such date as the Minister
application.
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Act 125.
Act 372.
Act A1307.
Act A1307.
Act A1307.
Act A1307.
Act A1255.
Act A1255.
Act A1307.
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Act A1255.
Act A1255.
Act A1255.
Act A1255.
PART II
LICENSING OF ISLAMIC BANKS
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Act A1255.
Minister may vary or 4. (1) The Minister may at any time, on the
revoke condition of recommendation of the Central Bank, vary or revoke any
licence.
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6. (Deleted).
Act A1214.
Opening of new 7. Except with the consent in writing of the Central Bank,
branches. no Islamic bank may open a new branch, agency or office in
Islamic bank may 8. (1) Subject to subsection (2), every Islamic bank may
establish establish a correspondent banking relationship with any bank
correspondent banking
relationship with bank outside Malaysia.
outside Malaysia.
Licence fee. 9. Every Islamic bank shall pay to the Central Bank such
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Restriction of the use 10. Except with the consent in writing of the Minister no
of certain words in an Islamic bank shall be licensed by a name which includes any
Islamic banks name.
Revocation of licence. 11. (1) Subject to subsection (2), if any Islamic bank
Act A1255.
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Publication of list of 13. The Central Bank shall cause to be published in the
Islamic banks. Gazette in each year a list of all Islamic banks to which
licences have been issued under this Act, and if any licence
is issued, revoked or surrendered during the interval between
the publication of two such lists, notice thereof shall also be
caused to be published in the Gazette.
Advice of Syariah 13A. (1) An Islamic bank may seek the advice of the
Advisory Council Syariah Advisory Council on Syariah matters relating to its
Act A1214.
banking business and the Islamic bank shall comply with the
advice of the Syariah Advisory Council.
(2) In this section, Syariah Advisory Council means the
Syariah Advisory Council established under subsection 16B
(1) of the Central Bank of Malaysia Act 1958.
PART III
FINANCIAL REQUIREMENTS AND DUTIES OF
ISLAMIC BANKS
Maintenance of capital 14. (1) The Central Bank may require an Islamic bank to
funds. maintain capital funds, unimpaired by losses or otherwise, in
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Percentage of liquid 16. (1) The Central Bank may from time to time prescribe
assets. by notice in writing to each Islamic bank a minimum amount
Act A1255.
Act A1255.
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Act 275.
Auditor and auditors 17. (1) Notwithstanding the provisions of the Companies
report. Act 1965, every Islamic bank shall appoint annually an
Act 125.
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Statistics to be 19. (1) Every Islamic bank shall send to the Central Bank
furnished. in such form as may be prescribed by the Central Bank
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(da) (Deleted).
(e) any such statistical information as may be requested
by the Central Bank.
(2) Except for the purposes of paragraph (d) of subsection
(1), any information received from a bank under this section
shall be regarded as secret between that bank and the Central
Bank.
Act A1145.
PART IV
OWNERSHIP, CONTROL AND MANAGEMENT OF
ISLAMIC BANKS
Information on change 21. (1) Whenever a change is about to occur in the control
in control of Islamic of any Islamic bank, the bank shall report the proposed
banks.
Act 102.
Act 6.
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Sanction for 22. (1) Every Islamic bank shall obtain the approval of the
reconstruction, etc., of Minister of any proposed
bank required.
Act A1255.
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Act 102.
PART V
RESTRICTIONS ON BUSINESS
(a) pay any dividend on its shares until all its capitalized
expenditure (including preliminary expenses,
organization expenses, share-selling commission,
brokerage, amounts of losses incurred and any other
item of expenditure not represented by tangible assets)
has been completely written off;
(b) grant an advance, loan or credit facility against the
security of its own shares; or
Act 125.
Act 102.
Act 6.
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Prohibition of loans, 25. (1) Unless otherwise exempted by the Central Bank
etc., to directors, with or without conditions, or except as provided for under
officers and
employees. subsection (2) or subsection (4) of this section, no Islamic
Act A634.
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Restriction on grant of 26. No Islamic bank shall grant any advance, loan or credit
loan, advance or credit facility under the exemption referred to in subsection (4) of
facility under section
25 (4). section 25 unless the following conditions are satisfied:
Restriction of credit to 27. (1) No Islamic bank shall grant any customer any
single customer.
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Act A634.
Disclosure of interests 28. (1) Every director of an Islamic bank who is in any
by directors. manner whatsoever, whether directly or indirectly, interested
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Limitation on credit 29. (1) Any credit facility granted by any Islamic bank to
facility for purpose of any person for the purpose of financing the purchase or the
financing the purchase
or holding of shares. holding of shares shall not exceed such percentage of the
Proof of compliance 30. Any Islamic bank, if at any time called upon in writing
with sections 24, 25, by the Central Bank to do so, shall satisfy it by the
26, 27 and 29.
PART VA
INTERNATIONAL ISLAMIC BANKING BUSINESS
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Act A1307.
Application for a
licence to carry on
international Islamic
banking business by
persons other than a
licensed Islamic bank
Act A1307.
Minister may vary or 30C. (1) The Minister may at any time, on the
Act A1307.
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additional conditions.
Licence under this Part 30D. (1) No person shall be granted a licence under
not to be granted in section 30B nor shall such person licensed thereunder carry
certain cases
Act A1307.
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Application of the 30E. (1) For the avoidance of doubt, it is declared that an
provisions of this Act Islamic bank or an international Islamic bank shall, in
to international Islamic
bank respect of the international Islamic banking business carried
Act A1307.
PART VI
POWERS OF SUPERVISION AND CONTROL OVER
ISLAMIC BANKS
Investigation of banks. 31. The Central Bank shall from time to time investigate,
Special investigation 32. The Minister may at any time direct the Central Bank to
of banks. make an investigation, under conditions of secrecy, of the
61/58.
Production of banks 33. (1) Subject to subsection (2), for the purposes of an
books and documents. investigation under section 31 or 32, an Islamic bank shall
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Banking secrecy. 34. (1) Except as provided in sections 31 and 32, nothing
Act A1255.
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Action to be taken if 35. (1) Every Islamic bank shall send to the Central Bank
advances are against within such period as may be prescribed by notice in writing
interests of depositors.
from time to time by the Central Bank after the last day of
each month a statement in the form to be prescribed by the
Central Bank showing particulars of all advances, loans or
credit facilities granted by it to
Act 125.
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(3) Any Islamic bank which has been issued with an order
by the Central Bank pursuant to this section may appeal in
writing to the Minister, who may, as he thinks fit, confirm,
vary or revoke the order of the Central Bank.
Banks unable to meet 36. An Islamic bank which considers that it is likely to
obligations to inform become unable to meet its obligations or is about to suspend
Central Bank.
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Effect of removal of 38. Where the Central Bank has acted under paragraph (c)
office of director or of subsection (2) of section 37 with respect to an Islamic
appointment of a
director of a bank by bank, the following provisions shall have effect
the Central Bank.
Act 125.
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Control of Islamic 39. (1) Where the Central Bank has assumed or has
bank by Central Bank. appointed another person to assume control of the business
Islamic bank under 40. (1) Where the Central Bank has assumed control, or
control of Central has appointed another person to assume control, of the
Bank to co-operate
with Central Bank. business of an Islamic bank in pursuance of paragraph (e) of
subsection (2) of section 37, the Islamic bank shall submit its
business to the control of the Central Bank or to that person
and shall provide the Central Bank with such facilities as the
Central Bank requires to carry on the business of that bank.
(2) Any Islamic bank which fails to comply with
subsection (1) or with any requirement of the Central Bank
thereunder shall be guilty of an offence and shall on
conviction be liable to a fine not exceeding four thousand
ringgit for every day during which the default continues.
bank.
Moratorium. 42. (1) The Central Bank may, with the approval of the
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Amendment of banks 43. (1) Every Islamic bank shall, prior to the making of
constitution. any amendment or alteration in the memorandum of
PART VII
MISCELLANEOUS
Indemnity. 44. (1) Neither the Government nor the Central Bank nor
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Act A1255.
Penalties on directors 46. (1) Any person who, being a director or manager of an
and managers. Islamic bank
61/58.
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Offences by 48. (1) Where any offence against any provision of this
companies, etc., and Act has been committed by a corporation, firm, society or
by servants and agents.
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General penalty. 50. Any Islamic bank which contravenes or fails to comply
Power of Governor to 51. (1) The Governor of the Central Bank, with the
compound. concurrence of the Minister, may compound any offence
Consent of the Public 52. No prosecution in respect of any offence under this Act
Prosecutor. shall be instituted without the consent in writing of the
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Public Prosecutor.
Regulations. 53. (1) The Central Bank may with the approval of the
Act A1307.
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Power to issue 53A. The Central Bank or the Minister may, from time to
guidelines, etc. time, issue such guidelines, circulars or notes as the Central
Act A1307.
Bank holidays. 54. No Islamic bank shall do any business with the public
Act 102.
Act A1307.
PART VIII
CONSEQUENTIAL AMENDMENTS
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Act 102.
Act 276.
(j) the company has held a licence under the Banking Act
1973 or the Islamic Banking Act 1983, and that
licence has been revoked or has expired and has not
been renewed; or.
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Act 276.
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Incorporating latest amendment Act A1307 - Islamic Banking (Amendment) Act 2007
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