Appraising Legal and Regulatory Framework for Personal Financing Offering by Islamic Banks and Non-bank Institutions in Malaysia

Islamic personal financing is one of the well-received financing products.It is crucial to ensure a strict compliance with the requirements prescribed by Shariah.However, Islamic personal financing is offered not only by Islamic banks but by other non-bank credit providers as well.This study attempts to appraise the divergent legal and regulatory framework for the offering of personal financing by both Islamic banks and selected non-bank institutions in Malaysia.Doctrinal legal research methodology and content analysis have been employed whereby relevant primary and secondary sources of law were appraised on the various legal and regulatory framework in respect of Sharīʿah-compliant personal financing offered by different types of credit providers in Malaysia.The findings disclose that while Islamic banks and prescribed development financial institutions are subjected to the extensive regime, concerted efforts need to be directed towards strengthening the current legal and regulatory framework for community credit companies to ensure end-to-end Sharīʿah compliance in the offering of Islamic personal financing.The study's findings act as a guide for relevant regulators in developing an overarching legal and regulatory framework for personal financing products that fall under their purview.This step is vital in ensuring that every process involved in offering Islamic personal financing is aligned with Sharīʿah principles.