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Monday, 21 December 2009

Islamic deposit insurance to create level playing field among banks

KUALA LUMPUR: The role of Islamic deposit insurance is to create a level playing field between Islamic and conventional banks apart from maintaining a foundation for public confidence to the banks, says Malaysia Deposit Insurance Corp (MDIC) chief executive officer Jean Pierre Sabourin.

“Apart from that, the role of Islamic deposit insurance is to reinforce the consumer protection aspects that are inherent in Islam,” he said at the 3rd Islamic Financial Services Board (IFSB) Public Lecture on Financial Policy and Stability yesterday.

In his lecture on the Role of Islamic Deposit Insurance in Providing Stability to the Islamic Financial System, Sabourin said the Islamic deposit insurance system in Malaysia, established in September 2005, was to provide equivalent protection for insurable Islamic deposits.

“Endorsed by the Syariah Advisory Council of Bank Negara and administered by MDIC, fund reserves under Islamic deposit insurance is invested only in syariah-compliant instruments and syariah-compliant activities,” he said.

Earlier, the Council of IFSB admitted eight new organisations into its membership after being approved at its 15th meeting. IFSB is an international standard-setting organisation to promote and enhance the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry.

The council also appointed governor of the Central Bank of Sudan Dr Sabir Mohamed Hassan and governor of the Central Bank of Jordan Dr Umayya Toukan as chairman and deputy chairman of the council respectively for 2010.

The meeting was chaired by the governor of the Saudi Arabian Monetary Agency and attended by the president of Islamic Development Bank, central bank governors and representatives of the IFSB 21-member council.

Bank Negara hosted both the council meeting and the subsequent IFSB public lecture.

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Alfalah Consulting - Malaysia: www.alfalahconsulting.com
Islamic Consultant & Trainer: www.ahmad-sanusi-husain.com
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