Malaysia is in the final stages of introducing a new legislation for Islamic banking and takaful products, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said, which gives a stronger legal basis to contracts devised by financial institutions.
Zeti did not give a time-frame for the launch of the legal framework.
She said the legislation would help the central bank better regulate and supervise the Islamic finance industry, which globally is valued at US$1.3 trillion (RM3.96 trillion).
“The legal, regulatory and supervisory framework will need to be adjusted to accord greater clarity to the appropriate legal and regulatory treatment,” said Zeti in a speech delivered in Jakarta.
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% by 2020 from about 20% at present.
Malaysia's Islamic finance industry is currently valued at US$144bil (RM439.2bil).