(1) Issuance of New Islamic Banking and Family Takaful Licences

As part of the announcement on the liberalisation measures for the financial sector, this statement sets out the criteria for the issuance of up to two new licences for Islamic banking with a minimum paid-up capital of USD 1 billion and up to two new licences for family takaful.

The new licensees must be locally incorporated in Malaysia and will be regulated by Bank Negara Malaysia.

The new Islamic banks will be licensed under the Islamic Banking Act 1983. The new Islamic bank may have a foreign equity interest of up to 100% whilst the minimum issued and paid-up share capital is USD1 billion.

The new family takaful operator will be registered under the Takaful Act 1984. The minimum issued and paid-up capital is to remain at RM100 million.

In assessing the merits of the applications, the following criteria will be adopted:

• The applicant must be a reputable regulated institution or a shareholder of a reputable regulated institution; and
• The applicant must demonstrate, through a comprehensive business plan, that the proposed new licensed institution to be established in Malaysia or the foreign partner intending to acquire equity interest in an existing domestic Islamic bank, needs to have necessary expertise and resources that can tap the global Islamic financial market and contribute to reinforce Malaysia's position as an international Islamic financial hub.

The business plan should include strong value propositions which, among others, should cover:

• Areas of specialised expertise with details on how the products and services offered will enhance the depth and breadth of the market;
• Commitment to develop human capital and infrastructural requirements for a robust Malaysian operation; and
• Concrete plans as to how the operations would be extended for regional and international expansion.

Duly completed applications for the new Islamic banking and family takaful licences should reach Bank Negara Malaysia by 31 October 2009. Successful applicants are expected to commence operations no later than twelve months from the date they receive their respective approval.

Application forms may be obtained from Bank Negara Malaysia 's website at www.bnm.gov.my . Further details may be obtained by contacting the following:

Director
Islamic Banking & Takaful Department
Bank Negara Malaysia
Telephone number: 603 2698 8044 ext 8395 or 603 2691 4606
E-mail: [email protected]

(2) Increase in foreign equity limits

The foreign equity limit for existing domestic Islamic banking institutions is increased to 70%. This revised limit also applies to existing domestic Islamic banking institutions that wish to transform into large Islamic banking institutions with a minimum paid-up capital of USD 1 billion and enter into strategic partnerships with foreign players.

For domestic takaful operators that wish to enter into foreign partnerships, flexibility is now accorded for such partnerships to have a foreign equity participation limit of up to 70%.

See also:

1. Application Form for Islamic Banking Licence [Doc] [PDF]
2. Application Form for Takaful Licence [Doc] [PDF]
3. Press Statement on Liberalisation of the Financial Sector
4. Press Statement on Issuance of New Commercial Banking Licences