Diversification of Islamic Financial Instruments
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property based on the diminishing partnership structure, which ultimately end with full
ownership by the customer.
Vehicle Financing
Vehiclefinancing is mostly offered based on the leasing, where the bank purchase and own the
vehicle prior to lease it out to the customer based on the leasing agreement. Upon maturity,
ownership of the vehicle is transferred to the customer based on specific arrangement agreed
in the contract.
Islamic Overdraft (Cash line) Facilities
Islamic Overdraft is facility granted for Shariah compliant purposes. It is a product for liquidity
management purpose, in Malaysia the Overdraft facility is based on commodity murabhah, by
right the facility is granted to serve Shariah compliant business activities, however, if the usage
of the facility is for Shariah non-compliant activities, then, it is beyond the bank’s control.
However, the bank has the right to terminate the facility if the Bank discovers that the purpose
of the facility is for Shariah non-compliance activities.
Islamic Credit Card
The Islamic Credit Card is facility to provide payment service and easy the payment
transaction of the customer through cash-less, the credit card has some benefit such as no
Annual fee, non-compounding charges, incentive treat points on transactions, some gift that
the Islamic bank may offer, such Takaful coverage. The credit card is used based on commodity
Murabahah/ Tawarruq and Ijarah
We have highlighted some of the products offered in the market, however in addition to the
above mentioned products there are other important products offered in the market
mentioned in the above table but not highlighted here such as trade finance which include
letter of credit and money market instruments that includes wide range of products such as
Wakala placement and others.
3.8.4 ISLAMIC CAPITAL MARKETS IN MALAYSIA
Islamic capital market in Malaysia is regulated by the Securities Commissions Malaysia, it is
regarded a dynamic and vibrant market that put Malaysian on the global map especially in the
area of Sukuk issuance where Malaysia for many years is maintaining the leadership as
number one (1) in the Sukuk market. The major products offered in the Islamic Capital Market
are listed in the table given below:
Table 63: Major Instruments and Their Underlying Shariah Contracts
PRODUCTS PRINCIPLES OF SHARIAH
Shares / Equity Musharakah
Mutual Funds / Unit Trust Musharakah (amongst the investor) and
Wakala (between the investor and the fund manager)
Private Equity Fund Musharakah and Wakala (as above)
REITs Musharakah and Wakala (as above)
Specific funds e.g. aircraft leasing fund Musharakah and Wakala (as above)
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