PETALING JAYA, 26 May 2015: The Islamic Financial Services Act (IFSA) 2013 allows greater flexibility for Islamic banks to structure products, including deposit and investment accounts, said the Association of Islamic Banking Institutions Malaysia's (AIBIM).
The umbrella body for 25 member banks said depositors are
now given the option to choose between investment and deposit accounts.
Customers, who opt for investment accounts which allow them
to invest in the Islamic banks' portfolio of assets, could potentially enjoy
higher returns than deposit accounts, it said.
"IFSA aims to encourage banks to diversify their
product offerings, hence the Act requires us to clearly differentiate between
investment and deposit accounts.
"This allows the banks to customise their products
according to the customers' profile and risk appetite. Those who are prepared
to take higher investment risk could potentially earn higher returns,"
AIBIM president Datuk Mohd Redza Shah Abdul Wahid said in a statement yesterday.
Just like any investment, the principal amount for
investment accounts is not guaranteed. Since these accounts are not deemed as
deposits under IFSA, the funds are not protected under the Perbadanan Insurans
Deposit Malaysia (PIDM) scheme.
"The Islamic banks will conduct customer suitability
assessments to ensure that customers choose investment accounts that
commensurate with their risk appetite, financial profile and capacity. This is
in line with the customer protection pillars under IFSA," Redza added.
With this new product offering, existing Mudharabah account
holders can opt for investment or deposit accounts. Islamic banks offering the
investment account option have communicated the specific product features and
benefits to their respective customers.
As such, customers are advised to inform their banks of
their preferred option, be it investment or deposit accounts, by the deadline
communicated by their respective banks.
Otherwise, their accounts will be maintained as deposit
accounts. The Islamic deposit accounts will continue to be guaranteed and
covered by PIDM.
Source: The Sun Daily
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