Answer to Question #314637 in Management for Zeinab Zoayter

Question

Required

 

1) Islamic banking was implemented in Malaysia following the enactment of the Islamic Banking Act in April 1983 and the subsequent establishment of its first Islamic bank, Bank Islam Malaysia Berhad (BIMB), in July 1983. 

In light of the above, define Islamic Banking and discuss its importance as an added value to the economy.                      

(15 marks)

 

2) Assume you are also one of the candidates taking the test to get placed as an analyst for the banking industry, explain Malaysia's dual banking system, regulations and interrelations. 

(15 marks)

Answer 1

The Malaysian government's commitment to Islamic banking growth was demonstrated by the enactment of the Islamic Banking Act 1983 and the Government Investment Act 1983. As a result, the Bank Islam Malaysia Berhad became the first Islamic bank to be established (BIMB). Islamic banking refers to a banking system that follows the principles of Islamic law (Shari'ah) and is guided by Islamic economics. Islamic law forbids the collection and payment of interest in particular. It also forbids trading in financial risk in general (seen as a form of gambling).