(1) Islamic banking business shall not be transacted Islamic in Malaysia except by a company which is in the possession of a licence in writing from the Minister to be authorizing it to do so.
(2) A company which desires authority to carry on fslanec Islamic banking business in Malaysia shall apply in writing through the Central Bank to the Minister for a licence under this section and shall supply-
(a) a copy of the memorandum of association and articles of association or other instrument under which the company is incorporated, duly verified by a statutory declaration made by a senior officer of the company; and
(b) such other document or information as may be called upon by the Minister.
(3) Upon receiving an application under subsection
(2) the Central Bank shall consider the application and make a recommendation to the Minister stating whether a licence should be granted or not and the conditions, if any, to be attached to the licence.
(4) Upon receiving an application under subsection
(2) and the recommendation of the Central Bank under subsection (3), the Minister may, subject to section 4, grant a licence, with or without conditions, or refuse a licence.
(5) The Central Bank shall not recommend the grant of a licence, and the Minister shall not grant a licence, unless the Central Bank or the Minister, as the case may be, is satisfied-
(a) that the aims and operations of the banking. business which it is desired to carry on will not involve any element which is not approved by the Religion of Islam; and
[Pt. II, S. 3-5] las may appraved thie cantrey Bunte 10/214/03 ing, ain 1ax5-= Minister may vary or revoke condition of licence. Licence not to be granted in certain cases.
(b) that there is, in the articles of association of the bank concerned, provision for the establishment of a Syar'iah advisory bodylto advise the bank on the operations of its banking business in order to ensure that they do not involve any element which is not approved by the Religion esa) of Islam
(6) Any person who contravenes the provisions of this section shall be guilty of an offence and shall on conviction be liable to a fine not exceeding twenty thousand ringgit or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.
(1) The Minister may at any time, on the recommendation of the Central Bank, vary or revoke any existing condition of a licence or impose conditions or additional conditions.
(2) The Minister shall, prior to any action under subsection (1), notify his intention in writing to take such action to the Islamic bank concerned and shall give the bank an opportunity to submit within such period, being not less than fourteen days, as may be specified in the notification reasons why the condition of the licence should not be varied or revoked or conditions or additional conditions should not be imposed.
(3) Where a licence is subject to conditions, the Islamic bank shall comply with those conditions.
(4) Any Islamic bank which fails to comply with any condition of its licence shall be guilty of an offence and shall on conviction be liable to a fine not exceeding twenty thousand ringgit.
(1) No company shall be granted a licence under section 3 nor shall any company licensed thereunder carry on business in Malaysia without the written consent of the Minister if its capital funds unimpaired by losses or otherwise is less than the minimum amount.
(2) For the purposes of this section— "capital funds" means paid-up capital and reserves and any other sources of capital as may be defined and computed in such manner as may be prescribed by notice in writing from time to time by the Central Bank;
ociation of e establish- , advise the ng business ction shall be aysia Deposit nng errullly a term not d imprisonrecommenany existing ir additional ction under ing to take d and shall within such , as may be he condition ed or condile imposed iditions, the litions. ply with any i offence and ot exceeding icence under i thereunder the written s unimpaired num amount. and reserves e defined and rrescribed by Central Bank; IPt. II, S. 5-9] • "minimum amount" means such amount of capital funds to be maintained by an Islamic bank as may be the Central Bank by notification in the Gazette. prescribed by the Minister on the recommendation of + (46 407783
(3) The prescription of the minimum amount to be maintained under subsection (2) shall be complied with within such uniform period of grace being not less than three months as may be specified in the notification.
(i) No company shall be granted or shall hold a fvnianlicence if the Minister is satisfied that it is or has become banks. foreign-owned or controlled.
(2) For the purposes of this section, a company shall be deemed to be foreign-owned or controlled if fifty per centum or more of its capital issued and paid-up 2/71214/03 is owned by or on behalf of persons who are not citizens of Malaysia, or if a majority of the persons having the direction, control or management of the company are not citizens of Malaysia.
Except with the consent in writing of the Central Openins . Bank, no Islamic bank may open a new branch, agency branches. or office in any part of Malaysia or outside Malaysia.
(1) Subject to subsection (2), every Islamic bank may Islamic" establish a correspondent banking relationship with any bank may bank outside Malaysia. establish COTTeSpondent
(2) The Central Bank may prescribe by notice in relationship writing that no Islamic bank shall, except with the outside approval of the Minister on the recommendation of the Malaysia, Central Bank, establish a correspondent banking relationship with any bank established in any of the countries specified in the notification or with any bank owned or controlled by the government or an agency of the government of any such country.
Every Islamic bank shall pay to the Central Bank Licencefec. such annual licence fee as the Minister, on the recommendation of the Central Bank, may by notification in the Gazette prescribe.
of the use of certain words in an Islamic bank's name. Revocation of licence. dei, AiA1aIC 119,751755 IPt. II, 10-11]
Except with the consent in writing of the Minister ine ludes any of the wordoe Centrar, Com nameeyhich "Federal" "Federation" "Malaysian", "Nadioaal", "Rederve or"Sata ayier i 'e ational Language or in English or in any other language.
(1) Subject to subsection (2), if any Islamic bank—
(a) is pursuing aums, or carrying on operations, involvıng any element which is not approved by the Religion of Islam;
(b) is carrying on its business in a manner detrimental to the interests of its depositors and other creditors;
(c) has insufficient assets to cover its liabilities to the public;
(d) is contravening any provision of this Act; ot
(e) has ceased to carry on banking business in Malaysia,er i) nas. the Minister may, on the recommendation of the Central Bank, revoke any licence issued to such bank.
(2) The Minister shall, prior to any such revocation, notify his intention to take such action to the Islamic bank concerned and shall give the bank an opportunity to submit within such period, being not less than twenty-one days, as may be specified in the notification reasons why the licence should not be revoked.
(3) Where the licence of an Islamic bank has been reyoked under subsection (1), the bank may within thirty days of the revocation appeal against the revocation to the High Court, which may make such order thereon as it thinks proper, including any direction as to the costs of the appeal.
(4) The Central Bank shall be entitled to be heard on any such appeal.
(5) The making of an appeal under this section shall in no way affect the exercise of the powers and duties of the Central Bank under sections 37, 39 and 40.
the Minister name which ımonwealth" "Malaysian", the National nguage. lamic banka operations, iot approved nanner detriepositors and ; liabilities to his Act; er ank has been may with st the rev ke such order y direction as 1 to be heard s section shall ers and duties 1 and 40. [Pt. II-III, S. 12-14]
(1) Where an order of revocation becomes effective Effect of under section 11— revocation of licence.
(a) notice of the revocation shall be published in the Gazette; and
(b) the Islamic bank shall as from the date of the notice cease to transact any banking business in Malaysia except as may be approved by the :Minister on the recommendation of the Central Bank for the purposes of winding up of its banking business.
(2) The provisions of paragraph (b) of subsection (1) shall not prejudice the enforcement by any person of any right or claim against the bank or by the bank of any right or claim against any person.
The Central Bank shall cause to be published in Publication the Gazette in each year a list of all Islamic banks to Islamic which licences have been issued under this Act, and it banks. 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. 13 A. .. us. by 17171214/03
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
