Bank Negara Malaysia wishes to inform that the Shariah Advisory Council (SAC) of Bank Negara Malaysia, in its 102nd meeting held on 22nd June 2010, had decided the following:-

1. Application of Wa'd (Promise) in Forward Currency Transaction
Islamic financial institutions are allowed to enter into forward foreign currency transaction for hedging purposes based on unilateral wa'd (promise) that carries binding effect on the promisor. Nevertheless, no consideration (or fee) is allowed to be charged on the promisee in view that upfront cash payment for forward currency transaction would lead to a bilateral wa'd which is not allowed by Shariah. This is in line with the view of the majority of ulama' who opines that unilateral binding wa'd without any consideration is permissible in a forward currency transaction.

2. Takaful Benefits Payable From Participants' Risk Fund
The SAC resolved that the payment of takaful benefits from Participants' Risk Fund (which pools participants' tabarru' (donation) contributions to meet claims by participants), can be made contingent upon specific events beyond those arising from a defined financial loss or a misfortune. This is allowed subject to the agreement by the contracting parties i.e. the participants.

The decision is made in line with the feature of the takaful contract which is established based on concept of tabarru' and ta'awuni amongst the participants. These two concepts allow participants to agree on the events leading to payment of the takaful benefits. The terms and conditions outlining the respective events must be made transparent to all the contracting parties in the takaful contract. Thus, with the agreement from the participants, the scope of events prompting payment of takaful benefits from the Participants' Risk Fund is not only limited to death, disability or calamity, but can also be extended to cover attainment of the contracted mandate. The features of the takaful product shall be consistent with the principles of Shariah and meet the requirements issued by Bank Negara Malaysia.

 

Shariah Advisory Council of Bank Negara Malaysia
25 August 2010