Impacts of the Islamic Financial Services Act 2013 on Investment Account products offered by Islamic Banks in Malaysia

Abstract

The Islamic Financial Services Act (IFSA) 2013 is a Malaysian banking law which was enacted to regulate and supervise the banking practices of Islamic finance institutions. IFSA 2013 has the effect of repealing the Islamic Banking Act 1983 (IBA), the Takaful Act 1984, the Payment System Act 2003 and the Exchange Control Act 1953. Prior to the introduction of IFSA 2013 there was no clear distinction between deposit and investment accounts. The IFSA 2013 re-defines Islamic deposit, and classifies investment accounts as non-principal guaranteed while deposit account as principal guaranteed. The objective of this paper is thus to explore implications of IFSA 2013 on investment accounts from the perspective of the banker. Future research could explore the perspective of account holders looking at their views on investment accounts and IFSA 2013.