$500m paid capital must for Islamic banking business

$500m paid capital must for Islamic banking business


New laws: Hjh Nurliati Hj Md Idris (C), talks about the Takaful Order 2008 during a briefing session held at the Ministry of Finance yesterday. Picture: BT/Saifulizam
UBAIDILLAH MASLI
BANDAR SERI BEGAWAN

Sunday, December 7, 2008

UNDER the new Islamic Banking Order 2008, a minimum paid capital of $500 million is required for a foreign head office as one of the criterion for granting and refusing licences to carry out an Islamic banking business in Brunei.

This was disclosed yesterday during a briefing session on the two new orders, Islamic Banking Order 2008 and Takaful Order 2008, held yesterday at the theatre hall of the Ministry of Finance, where the main highlights were explained by a panel of officers from the Financial Institutions Division (FID).

When compared to regulations on conventional banking and insurance systems, the two Orders were found to be quite similar to pre-existing legislation for normal banks and insurance.

Differences include the above criteria for granting and refusing license to carry out Islamic banking business in Brunei, which under the Banking Order 2006, the requirement is $1 billion.

Another difference stated was that the new Orders ensured that products and services were Syariah-compliant. Under the Takaful Order 2008, any product had to be approved by the Syariah Financial Supervisory Board before it can be deemed as a takaful product.

In light of the "uncertain financial environment", the permanent secretary at the Ministry of Finance yesterday urged senior corporate citizens to play their part in ensuring the financial stability and orderly running of the financial system, with regards to the recent introduction of the two new Orders.

Dato Paduka Hj Ali Apong told representatives of Islamic banks and Takaful operators that alongside the ministry's efforts, relevant financial institutions should take their own initiative and avoid simply waiting for instructions from the government on what to do.

"It is in your best interest that our financial sector continues to remain sustainably stable," he said.

"I urge you to hold more and regular discussions amongst yourselves, with regulators to encourage fruitful exchange of views and perspectives on the best way forward."

He reminded them of the need to comply with the regulations and requirements of the ministry and to be equally, if not more, proactive and responsible. He made these statements as the guest of honour at the briefing session yesterday.

The introduction of the new regulation was seen as another impetus to the regulations in the industry.

The permanent secretary said that it was the ministry's aim to expand the Islamic banking sector in Brunei through creating a level playing field for conventional and Islamic banks.

With the Takaful Order 2008, this new legislation hoped to provide a platform for takaful operators to compete more easily with conventional insurers.

It was hoped that with the introduction of the new Orders, Islamic banking, insurance and the takaful sector in Brunei would expand and be developed with new products launched within the regional and global arena. (ODM1)

The Brunei Times