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Islamic banking probe taking place in Malaysia
Barbados News.Net
Saturday 31st July, 2010
There appear to be possible conflicts between civil and Islamic law in Malaysia, in regard to the country's banks.
There have been a number of high-profile legal disputes over the finance industry in the past year, with sharia banking disputes coming to the fore.
Lawyers, bankers and sharia scholars in Malaysia have had to assess the industry where Sukuk holders rank in priority of payment when default occurs.
A dedicated committee of legal professionals is now meeting to look into the civil law provisions which have at times conflicted with the sharia rules of Islamic finance.
While Islamic products have their own conditions, land law and contract law are all conventional laws.
A near-default in December of the dollar-denominated sukuk from Dubai property developer Nakheel created fears that Islamic financing instruments may not be a safer alternative to conventional investments.  Email this story to a friend
Comments on this story
Anonymous
08-02-10, 11:13 PM |
Possible conflicts spring up in Islamic banking
This article is malicious and inaccurate. The legal framework for Islamic finance in Malaysia is the most transparent and advanced compared to any other country in the world. Disputes arising from defaults are dealt with in similar manner to conventional finance, efficiently and on almost equal footing (subject to complexity of each case). The committee established is not merely to address conflicts but more visionary - to strengthen the legal and regulatory framework further. The land law and contract law in Malaysia facilitate and accommodate Islamic finance; they never conflict with the Islamic finance products. The near-default of Nakheel has nothing to do with Islamic financing instruments - a conventional instrument would face the same situation in view of the credit position of the obligor.
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