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Exposure Draft on Rahn

Release Date: 31 May 2017

As part of the objective to strengthen the Shariah-compliance practice among Islamic financial institutions (IFIs), Bank Negara Malaysia (the Bank) is developing a Shariah-based regulatory policy with the objective of providing comprehensive guidance to the Islamic financial industry on to end-to-end compliance with Shariah.

This exposure draft sets out the Bank’s proposed operational requirements on the operationalisation of rahn contract (collateral) with respect to governance and oversight, structuring, risk management, business and market conduct as well as financial disclosure. This exposure draft also outlines the Shariah requirements that highlight the salient features and optional practices of a valid Shariah contract to facilitate sound understanding of rahn contract by the IFIs.

The Bank invites written feedback and comments on Part C, that is, the operational requirements of a rahn contract, including suggestions for particular issues/areas to be further clarified or elaborated on and any alternative proposals that the Bank should consider. The Shariah requirements in Part B serves as reference to facilitate the IFIs in providing feedback and comments on the operational aspects of the rahn in line with Shariah requirements. To facilitate the Bank’s assessment, please support each comment with a clear rationale, accompanying evidence or illustration, as appropriate. 

Please submit responses to the Bank by 15 June 2017.

Details can be found in the following document:

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