Two-year transition for Islamic banks to reclassify deposits

PETALING JAYA: Islamic banks are required to reclassify their deposits into Islamic deposits and investment accounts under the Islamic Financial Services Act 2013 (IFSA).
Under the repealed Islamic Banking Act 1983 (IBA), all monies accepted from customers are classified as Islamic deposits, which comprise both deposit and investment products.
Islamic banking institutions are given a two-year transition period until June 30, 2015 to reclassify their products accordingly.
"The differentiation will allow the Islamic banking institutions to develop a wider range of products for both classifications to meet the diverse needs of the customers," Bank Negara Malaysia (BNM) said in a statement yesterday.
"Consequently, customers will be able to better appreciate the product offerings by the Islamic banking institutions and make an informed decision in respect of the choices of Islamic banking products," it added.
BNM said Islamic banking institutions will engage with their customers in providing information and clarification on the differences between the Islamic deposit and investment account products as well as the options available to them to either retain their placements in Islamic deposit or migrate to investment accounts.
"The Islamic banking institutions will allow sufficient time for the customers to inform them of their decision," said the central bank.
During the transition period, all lslamic deposits accepted under IBA will continue to be protected by Perbadanan Insurans Deposit Malaysia while the Islamic banks will also ensure that the customers' rights are protected.