Islamic banking probe taking place in Malaysia

Zimbabwe News.Net
Saturday 31st July, 2010

There appear to be possible conflicts between civil and Islamic law in Malaysia, in regard to the country's banks.

There have been a number of high-profile legal disputes over the finance industry in the past year, with sharia banking disputes coming to the fore.

Lawyers, bankers and sharia scholars in Malaysia have had to assess the industry where Sukuk holders rank in priority of payment when default occurs.

A dedicated committee of legal professionals is now meeting to look into the civil law provisions which have at times conflicted with the sharia rules of Islamic finance.

While Islamic products have their own conditions, land law and contract law are all conventional laws.

A near-default in December of the dollar-denominated sukuk from Dubai property developer Nakheel created fears that Islamic financing instruments may not be a safer alternative to conventional investments.

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