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The Shariah Advisory Council (SAC) of Bank Negara Malaysia at its 210th meeting on 23 December 2020 has ruled that the adoption of risk-free rate (RFR) as an alternative benchmark rate to LIBOR, or as a fallback benchmark replacement rate after the permanent cessation of LIBOR, is permissible based on the following justification:
In transitioning to the alternative RFR, Shariah Committee of each IFI needs to determine the appropriateness of invoking the deemed consent mechanism to signify customers’ consent on the incorporation of the fallback provision in the contract’s terms and conditions.
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