Malayia lifts Islamic banking restrictions

14 August 2007

Malaysia is to lift restrictions limiting foreign banks' from conducting Islamic business in foreign currencies, it has been reported.

Under the reforms, non-Islamic commercial banks and investment banks, which have already been approved by authorities through the Banking and Financial Institutions Act, will now be able to carry out business, as the government looks to make the country a hub of the Islamic banking sector.

Bank Negara governor Zeti Akhtar Aziz told Forbes: " We want and aim to develop Malaysia into a centre for the origination, distribution and trading of sukuks (Islamic bonds) to provide further impetus to the development of an increasingly vibrant and progressive bond market in Malaysia as well as in the Asian region."

Malaysia's Islamic finance industry is worth $38 billion in assets, with Islamic banking assets accounting for 12 per cent of total bank assets, the central bank stated.

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