Islamic Banking in Malaysia | Research Introduction

Chapter 1 Introduction

Background of Studies

Islamic Cyberbanking is a cyberbanking arrangement that based on Islamic Law (Shariah). It follows the Shariah, alleged fiqh muamalat (Islamic rules on transactions). The rules and practices of fiqh muamalat came from the Quran and the Sunnah, and alternative accessory sources of Islamic law such as opinions collectively agreed amid Shariah advisers (ijma’), affinity (qiyas) and claimed acumen (ijtihad).

The basal attempt of Islamic cyberbanking are the prohibitions of absorption (usury) in all transactions, the adventure business and barter activities allegation be based on fair and accepted accumulation and the prohibitions of cartel and hoarding. By accomplishing so, Islamic banks will aegis the Islamic communities and societies from activities that are banned in Islam.

Islamic Cyberbanking is one of the fast growing cyberbanking industries today, abounding institutions accept stepped into this multi-billion dollar booming industry by establishing its Islamic wings and units. Thus it may accept a acceptable anticipation in the future.

Introduction

Islamic banks accept been operating like alternative acceptable banks about four decades. Like addition accepted or bartering bank, they additionally activate deposits and acceding accommodation to other. However, there are some altered amid Islamic coffer and accepted or bartering bank. Islamic coffer active the business based on Islamic Law (Shariah). Besides, Islamic cyberbanking additionally banned the affairs based on absorption rate. Beyond the aloft distinct, Islamic coffer are agnate with accepted or bartering coffer as the articles and casework provided are the same.

Generally, we can ascertain the Islamic coffer as a non-interest based cyberbanking institution, which complies absolutely with Islamic Laws and has artistic and accelerating cyberbanking engineering to action able and aggressive banking, investment, barter finance, bartering and complete acreage costs casework (AbdulQawi, O. and O. Lynn, 2001.)

Islamic Cyberbanking is now one of the world’s better faster-growing bread-and-butter sectors, complete over 300 institutions over 75 countries. Islamic Cyberbanking refers to a arrangement of banking, which is afterward the Islamic Law or Sharia attempt and guided by Islamic economics. In Islamic banking, the accumulating and acquittal of absorption (also frequently alleged ‘Riba’ is prohibited. In general, Islamic law additionally prohibits bodies from trading in cyberbanking accident because is apparent as a anatomy of gambling. Besides, advance in businesses that are advised as ‘haram’ additionally banned in Islamic law.

  1. Various Concepts of Islamic Cyberbanking Products
  • Profit administration cyberbanking products
    • Musyarakah (partnership/ collective venture)
      • Involve 2 or added parties.
      • All parties advance their money in a business.
      • Distribution of accumulation will be aggregate according to the agreed ratio.
      • Losses will be borne by all parties (share the losses on the base of their disinterestedness participation).
    • Mudharabah (profit sharing)
      • There is an acceding amid basal provider and entrepreneur.
      • Capital provider provides money for an administrator to backpack out a business.
      • Profit will be aggregate in accumulation administration based or pre-profit arrangement (Variable rate).
      • Losses accept to buck by basal provider of the fund.
    • Qardhul Hassan (benevolent loan)
      • Interest chargeless loan
      • Need to accord the arch bulk adopted additional an added bulk at borrower’s borrower¡¯s complete acumen (as badge of appreciation)
      • Example: Amanah Ikhtian Malaysian (AIM)
        • The Coffer may use an adapted admeasurement of the funds at its auctioning for what may be advised as the acquittal of its amusing responsibilities through loans to absolutely admirable barter for aces bread-and-butter projects with the basal cold of abutment and assistance.
        • The borrower is answerable beneath Syariah to accord alone the arch bulk of the accommodation according to its agreement and conditions.
        • The Coffer cannot appeal the borrower to pay annihilation afar from the arch bulk of the loan, although in Syariah it is adorable that the borrower does so at his/her own discretion.
    • Wakalah (nominating addition actuality to act)
      • A situation
      • A actuality nominates addition actuality to act on his behalf.
    • Hawala
      • Bill of exchange, promissory note, cheque or draft.
      • Example: a debtor passes on the albatross of acquittal of his debt to a third affair who owes the aloft a debt. Thus the albatross of acquittal is ultimately confused to a third party.
      • A apparatus for clearing all-embracing accounts, by book transfers. This obviates, to a ample extent, the call of concrete alteration of cash.
  • Advance acquirement cyberbanking products
    • Murabahah (cost plus)
      • Short appellation loan
      • Involve in asset buying
      • Bank buys it and sells it aback to you aback it is mature.
      • The amount will accommodate a accumulation allowance as agreed to by both parties. (Cost + accumulation margin)
      • It is agnate to apartment loan.
      • Payment can pay aback in lump-sum or account acquittal and the aeon of advantageous aback is set by the borrower.
    • Istisna (Progressive Financing)
    • A arrangement of accretion of appurtenances by blueprint or adjustment area the amount is paid progressively in accordance with the advance of a job.
    • Ijarah (leasing)
      • Leases equipment, architecture or alternative facility
      • At an agreed rental adjoin a anchored allegation (agreed by both parties)
  • Deposit products
    • Wadiah Yad Dhamanah (savings with guarantee)
      • For administration or extenuative purpose.
      • Wadiah is a Assurance which agency that the depositor allegation assurance the depository.
      • Bank (depository) act as trustee
      • Depository becomes the angel who needs to agreement claim of deposit.
      • There is no absorption t be provided.
      • Depository has provided the acknowledgment to a depositor as badge of appreciation.
      • Return (profit) accustomed based on accumulation administration (Fixed rate)
        • Mudharabah
      • Deposit articles based on revenue-sharing amid depositor and bank, including extenuative articles that can be aloof any time and time drop products.
    • Qard al-Hasanah
      • Unremunerated drop products, usually for accommodating purposes.
  • Insurance products
    • Takaful
    • Islamic allowance with collective risk-sharing

History

The aboriginal avant-garde agreement with Islamic cyberbanking was undertaken in Egypt beneath awning after bulging an Islamic angel to abstain of actuality apparent as a appearance of Islamic fundamentalism that was abomination to the political regime. The beat effort, led by Ahmad Elnaggar, took the anatomy of a accumulation coffer based on profit-sharing in the Egyptian boondocks of Mit Ghamr in 1963. This agreement lasted until 1967 (Ready 1981), by which time, there were nine such banks in the country.

In 1972, the Mit Ghamr Accumulation activity became allotment of Nasr Amusing Coffer which, until the date, is still in business in Egypt. In 1975, the Islamic Development Coffer was set up with the mission to accommodate allotment to projects in the affiliate countries. The aboriginal avant-garde bartering Islamic bank, Dubai Islamic Bank, opened its doors in 1975. In the aboriginal years, the articles offered were basal and acerb founded on accepted cyberbanking products, but in the aftermost few years the industry is starting to see able development in new articles and services.

Islamic Cyberbanking is growing at a bulk of 10-15% per annum and with signs of connected approaching advance (Islamic Banks and Cyberbanking Stability: An Empirical Analysis, 2008). Islamic banks accept added than 300 institutions advance over 51 countries.

The ancient anatomy of Islamic Cyberbanking in Malaysia was set up by Perbadanan Wang Simpanan Bakal-Bakal Haji (the Pilgrims’ Administration and Armamentarium Board) in 1963. This academy was set up for Muslim to save and abetment them to accomplish a crusade in Makkah as able-bodied as to animate them to participate in advance opportunities and economic. While the aboriginal Islamic coffer accustomed in Malaysia was Coffer Islam Malaysia Berhad (BIMB) which commenced operations on 1 July 1983.

The government of Malaysia had alien a analytical action to apparatus a able Islamic cyberbanking arrangement amid the bodies in Malaysia. The aboriginal appearance is the aeon of acclimatization during year 1983-1992, and this is the time that Coffer Islam Malaysia Berhad established. During this period, BIMB has developed itself as one of the best admirable cyberbanking institutions in the country, and been listed on Kuala Lumpur Stock Barter (KLSE) on 17th January 1992.

The additional appearance was happened in year 1993-2003. In these ten years, the government on Malaysia was aimed on creating a added accessory ambiance for antagonism amid the banks and accord banks to try to abduction the bazaar share. During year 1993, the accepted banks were accustomed to action Islamic cyberbanking casework by ambience up “Islamic windows” or “Islamic cyberbanking arrangement (IBS)” to allure the accessible abnormally Muslim to complex in.

The third appearance that commenced from 2004 was the aeon of added cyberbanking liberation. At this time, the government gives the opportunities to adopted Islamic banks to accomplish in our country by arising a authorization to them. Malaysia is the aboriginal country that accouterments bifold cyberbanking that Islamic cyberbanking arrangement and accepted cyberbanking arrangement accomplish ancillary by side.

Problem Statement

The Islamic cyberbanking nowadays is accepting rapidly and activity popularity. Abounding bounded and adopted banks in Malaysia are offered and accessible appropriate Islamic Cyberbanking counter. In this research, I will focus on the performance, problems and anticipation of Islamic cyberbanking in Malaysia. There are lots of issues about Islamic cyberbanking in Malaysia, such as accessible acceptance, factors of alternative against the casework and products, accident administration and others. This will be discussed in the abutting affiliate which is abstract review. Even the Islamic cyberbanking has been alien in our country over 20 years, but there still accept to accommodated some problem. Based on the above, the analysis problems are listed as below:

  • Lack of ability amid accessible about the anticipation of Islamic cyberbanking in Malaysia
  • Lack of compassionate about Islamic cyberbanking makes the bodies do not absorb in it.
  • Islamic cyberbanking has a altered accident contour than the accepted coffer due to the Islamic banned of interest.
  • Public acceptances of Islamic cyberbanking are not strong.

Research Objective

    • To abstraction the problems and achievement of Islamic Cyberbanking in Malaysia
      • Islamic Cyberbanking has emerged as a new absoluteness in the all-embracing cyberbanking arena back the 1970s and has been accustomed in Malaysia over 20 years. The actualization of Islamic cyberbanking is generally accompanying to the awakening of Islam and the admiration of Muslims to alive in all aspects of their activity in accordance with the article of Islam. This cardboard is advised to abstraction about the achievement of Islamic cyberbanking and actuate how able-bodied it.
    • To assay the anticipation and advance of Islamic Cyberbanking in Malaysia

Islamic cyberbanking has a cogent advance in Malaysia. Abounding bounded banks as able-bodied as adopted banks are now accouterment Islamic cyberbanking and accounts casework to the public. The factors that actuate the anticipation and advance charge to be studied. As a country that consisted of a bifold cyberbanking system, Malaysia plays an important role as an archetype to alternative countries on how to advance this affectionate of cyberbanking system. This may accord the opportunities to Islamic cyberbanking to aggrandize and abide to growth.

    • To acquisition out the accessible accepting and acquaintance of Islamic Accounts Product amid Malaysian

The accessible accepting is arena an important role to actuate the assumption of Islamic cyberbanking in Malaysia. Best of the bodies are ambidextrous with the accepted cyberbanking because the absorption bulk provides a connected acknowledgment for the customers. Islamic cyberbanking apostle absorption chargeless makes bodies anticipate that there is no acknowledgment by advance their money in Islamic cyberbanking casework and products. Thus the accessible acceptances charge to be aloft as this will alone accompany a acceptable anticipation and approaching for Islamic cyberbanking industry.

    • To abstraction the agency access the alternative of Islamic Banking.

Currently Islamic coffer strategically alms aerial affection articles and casework to amuse their barter due to the able competition, a chump expectations for aerial affection casework and rapidly changes of technology. Factors that are absorption to customers’ acumen and achievement on Islamic Cyberbanking charge to be investigated. This abstraction achievement to assay and actuate the perception, affection of services, availability of services, aplomb in coffer and amusing and religious angle about the Islamic cyberbanking system.

Scope of Studies

The ambit of studies of this analysis cardboard is a focus on the problems, achievement and anticipation about Islamic cyberbanking industry in Malaysia. This cardboard additionally introduces assorted Islamic cyberbanking affairs provided and accord a briefly call about the articles and services. Besides, this analysis additionally discussed about the factors of alternative on Islamic cyberbanking and some accepted issues through the abstract review.

Organization of Research

This analysis is disconnected into three sections, which includes:

  • The use of abstract analysis to acquisition out what is the accepted bearings about Islamic cyberbanking industries. By analysis these journals, I can calmly analyze the performance, problems and anticipation about Islamic cyberbanking industry in Malaysia. This would be the aboriginal allotment of research. After this step, a framework will be developed and to accept the variables.
  • Once the framework is actuality done, a check will be created to accept the anarchy and the appulse of Internet Cyberbanking for the users. This check will again be broadcast for results.
  • The third allotment of the analysis will be allegory if the after-effects of questionnaires scientifically and appear with abstracts and affidavit of accurate happening. Once this is actuality done, again we will codify assorted measures that could be done to accomplish the bearings added favourable.

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