s 31
The Central Bank shall from time to time Investigainvestigate, under conditions of secrecy, the books, banks. accounts and transactions of each Islamic bank anc of any branch, agency or office outside Malaysi opened by an Islamic bank.
Islamic Banking Act 1983 Part VI — Powers of supervision and control over islamic banks
s 32
The Minister may at any time direct the Central Special Bank to make an investigation, under conditions of investigation secrecy, of the books, accounts and transactions of an of banks. Islamic bank, if he has reason to believe such Islamic bank is carrying on its business in a manner detrimental to the interests of its depositors and other creditors, or has insufficient assets to cover its liabilitie to the public, or is contravening the provisions of thi Act or of the Central Bank of Malaysia Ordinance 61/58. 1958.
s 33
(1) Subject to subsection (2), for the purposes of Production an investigation under section 31 or 32, an Islamic booksand accounts and dotumens and shkil gise s ich inoks. documents. mation and facilities as may be required to conduct (2) Books, accounts and documents shall not be required to be produced at such times and at such places as. shall interfere with the proper conduct of the normal daily business of the bank concerned. ..-- .._. [Pt. VI, S. 33-34] (3) Any Islamic bank which fails to allow access to its books, accounts and documents or to give information or facilities in accordance with subsection (1) 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. F.M.S. Cap. 45. Banking secrecy. 1c1 33. : ! ... within the meaning of the Penal Code.
s 34
(1) Except as provided in sections 31 and 32, nothing in this Act shall authorize the Minister to durect the Central Bank, or shall authorize the Central Bank, to enquire specilically into the atlairs of any individual customer of any Islamic bank and any incidental information relating to the affairs of the indıvıdual customer obtained by the Central Bank in the course of an inspection or investigation made by the Central Bank under the provisions of this Act shall be secret between the Central Bank and that bank. (2) Nothing in this section shall be deemed to limit any powers conferred upon the High Court or a Judge thereof by the Bankers' Books (Evidence) Act 1949 or to prohibit obedience to an order made under that (3) Except with the consent of the Central Bank in writing and to the extent specified therein, no officer of any Islamic bank and no person who by reason of his capacity or office has by any means access to the records of that bank, registers or any correspondence or material with regard to the account of any individual customer of that bank shall give, divulge or reveal any information whatsoever regarding the moneys or other relevant particulars of the account of the customer unless— (a) the customer or his personal representative gives his permission so to do: (b) the customer is declared bankrupt; or (c) the information is required to assess the creditworthiness of the customer relating to a bona fide commercial transaction or a prospective commercial transaction. iirs OI ass s and any airs of the :al Bank in in made by of this Act k and that ned to limit t or a Judge =) Act 1949 = under that tral Bank in n, no officer by reason of access to the rrespondence ny individual or reveal any neys or other the customer representative t; OT ss the creditn to speina IPt. VI, S. 34-35] (4) The provisions of subsecibn (3) shall not apply to the giving of information to auditors appointed under section 17, officers and employees of the bank who are sus, naoss resident in Malaysia. (5) Any person who acts in contravention of the provisions of this section shall be guilty of an offence and shall on conviction be liable to a fine not exceeding forty thousand ringgit or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.
s 35
(1) Every Islamic bank shall send to the Central Action tobe Bank within such period as may be prescribed by notice in writing from time to time by the Central Bank after are agains the last day of each month a statement in the form to interests ol be prescribed by the Central Bank showing particulars of all advances, loans or credit facilities granted bý (a) any corporation which is deemed to be related to the bank as described in section 6 of the Companies Act 1965; (b) any corporation or public company reterred to in subsection (4) of section 25; and (c) any individual in whom and any firm or corporation in which any of its directors is interested, directly or indirectly, as declared under the provisions of section 28, other than advances, loans and credit tacilities particulars of which have already been supplied pursuant to the preceding paragraphs. (2) If on examination of the particulars supplied by an Islamic bank under subsection (1) it appears to the Central Bank that any such advance, loan or credit facility is being granted to the detriment of the interests of the depositors of that bank, the Central Bank may by order in writing prohibit that bank from granting any further advance, loan or credit facility or impose such restrictions on the grant thereof as the Central Bank thinks fit, and may further direct that bank to secure repayment of any such advance, loan or credit facility within such time and to such extent as may be specified in the order: Act 125. Banks unable to meet obligations to inform Bank. Action by Contral Bank if bank unable to meet obligations or conducting business to the detriment of depositors. [Pt. VI, S. 35-37] (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.
s 36
An Islamic bank which considers that it is likely to become unable to meet its obligations or is about to suspend payment shall forthwith inform the Central Bank of that fact.
s 37
(1) Where... (a) an Islamic bank informs the Central Bank- (i) that it considers that it is likely to become unable to meet its obligations; or (ii) that it is about to suspend payment; (b) an Islamic bank becomes unable to meet its obligations or suspends payment; or (c) after an investigation is made under section 31 or 32 the Central Bank is of the opinion that an Islamic bank- (i) is following unsound or improper practices; (ii) is likely to become unable to meet its obligations or is about to suspend payment; (iil) has contravened or failed to comply with any provision of this Act; (iv) has contravened or failed to comply with any condition imposed on its licence; or (v) is likely to be carrying on its business ir a manner detrimental to the interests of its depositors, the Central Bank, with the concurrence of the Minister, may exercise such one or more powers specified in subsection (2) as it deems to be necessary. ed with an ection may is he thinks he Central it is likely is about to he Central 1 Banki to become ; Or ayment; to meet its r section 31 pinion that improper to meet its ispend paycomply with comply with licence; or . business in interests of he Minister, specified in - [Pt. VI, S. 37-38] (2) Subject to subsection (1), the Central Bank may- (a) issue orders to the bank to take such steps as the Central Bank may consider necessary to rectify the matter and the bank shall carry ut such orders within such time as may b prescribed by the Central Bank (b) prohibit the bank from extending any further the Central Bank may impose; (c) remove from office any of its directors or appoint any person as its director; (d) appoint a person to advise the bank on the proper conduct of its business; (e) assume control of, and carry on, the business of the bank or appoint some other person to assume control of, and carry on, the business of the bank; or (f) present a petition to the High Court for the winding up of the bank by the Court. (3) Where the Central Bank has appointed a person— (a) to be a director of the bank under paragraph (c) of subsection (2); (b) to advise the bank on the proper conduct of its business under paragraph "(d) 'of subsection (2); (c) to assume control of, and carry on, the business of the bank under paragraph (e) of subsection (2), the Central Bank may fix the remuneration and expenses to be paid to that person by the bank.
s 38
Where the Central Bank has acted under paragraph Effect of (c) of subsection (2) of section 37 with respect to an removal of office of Islamic bank, the following provisions shall have director or effect— appointment of a (a) notwithstanding anything contained in the director Companies of a bank and the articles of by the association of the bank, the rights of the mem- Bank. bers or holders of shares to elect directors of Act 125. [Pt. VI, S. 38-39] Control of Islamic bank by Bank. the bank in place of those who are removed from office by the Central Bank shall cease to be exercisable; (b) any director removed from office under that paragraph shall cease to hold office, and shall not be entitled to claim any compensation for the loss or termination of office; and (c) every r'emoval or appointment under that paragraph shall be final and conclusive and shall not be questioned in any Court.
s 39
(1) Where the Central Bank has assumed or has appointed another person to assume control of the business of an Islamic bank in pursuance of paragraph (e) of subsection (2) of section 37, the Central Bank or that person shall, subject to subsection (2), remain in control of the bank and continue to carry on the business of the bank in the name and on behalf of the bank until such time as the Central Bank is satisfied that the reasons for which it assumes control or has appointed another person to assume control have ceased to exist. (2) Where the Central Bank has assumed control, or has appointed another person to assume control, of the business of an Islamic bank in pursuance of paragraph (e) of subsection (2) of section 37 the High Court may, upon application of the bank, order that the Central Bank shall cease to control the business of the bank as from a date specified in the order if the High Court is satisfied that it is no longer necessary for the protection of the depositors of the bank that the Central Bank should remain in control of the business of the bank. (3) Where the Central Bank has assumed control, or has appointed another person to assume control, of the business of an Islamic bank in pursuance of paragraph (e) of subsection (2) of section 37, or ceased to control the business of an Islamic bank in pursuance of this section, the Central Bank shall notify that fact in the Gazette. 3 removed 1l cease to ınder that ,and shall isation for that paraand shall led or has rol of the paragraph al Bank or remain in ry on the half of the is satisfied rol or has lave ceased control, or control, of se of para- Figh Court I that the ness of the f the High ary for the the Central ness of the =d control, control, of ce of parar ceased to pursuance ý that fact [Pt. VI, S. 40-42] ISLAMIC' BANKING
s 40
(1) Where the Central Bank has assumed control, Islamic or has appointed another person to assume control, of bank under control of the business of an Islamic bank in pursuance of para- Central graph (e) of subsection (2) of section 37, the Islamic co-operate bank shall submit its business to the control of the Bank. with Central 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.
s 41
Any reference in this Part to an Islamic bank shall Extension be read as including a reference to a subsidiary of an doito Islamic bank.
s 42
(1) The Central Bank may, with the approval of Moratorium the Minister, if it considers it to be in the interests of the depositors of an Islamic bank, make an order prohibiting the bank from carrying on banking business or from doing or performing any act or function connected with banking business or any aspect thereof as may be specified in the order. (2) The Central Bank may, with the approval of the Minister, if it considers it to be in the interests of the depositors, apply to the High Court for an order staying the commencement or continuance of any proceedings by or against the bank in regard to any business of the bank. Such an order shall be valid for a period not exceeding.six months. :(3) So long aș an order under subsection (1) remains in force the licence granted to the bank under this Act shall be suspended. • (4) Where an order has been made under subsection (1), the: Central Bank shall notify that fact in the (4) . Ce ara Gazette. [Pt. VI-VII, S. 43-44] Amendment. 43. (1) Every Islamic bank shall, prior to the making constitution. of any amendment or alteration in the memorandum of association or articles of association or other instrument under which it is incorporated, furnish to the Central Bank particulars in writing of such proposed amendment or alteration for its approval. (2) Every Islamic bank shall, within three months after the making of any amendment or alteration in the memorandum of association and articles of association or other instrument under which it is incorporated, furnish to the Minister through the Central Bank particulars in writing (verified by a statutory declaration made by a senior officer of the bank) of such amendment or alteration. (3) Any Islamic bank which fails to comply with the requirements of subsection (1) or (2) shall be guilty of an offence and shall on conviction be liable to a fine not exceeding two thousand ringgit for every day during which the default continues.
Back to Islamic Banking Act 1983 — full text
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
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).
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