KUALA LUMPUR -- Malaysia will introduce two programs to certify professional qualifications in Islamic finance, a central bank official said Tuesday.
The programs, the first of their kind in the world, will be launched by the end of this year by the Chartered Institute of Islamic Finance Professionals, a professional body in charge of setting standards for Islamic finance practitioners.
Malaysia is at the forefront of technological innovations in the Islamic finance industry. The sector now accounts for nearly 30% of total banking assets in the country.
Bank Negara Malaysia, the country's central bank and industry regulator, has been guiding talent development for the sector through its affiliated International Centre for Education in Islamic Finance and the International Shariah Research Academy for Islamic Finance.
The two certifications of chartered Islamic banker and chartered Takaful practitioner are the equivalent of chartered banker qualifications under conventional banking and are designed to meet the growing demand for qualified professionals in the sector. Takaful is an Arabic word referring to Islamic insurance.
"We would like to elevate the professionalism of talent in Islamic finance," Marzunisham Omar, Bank Negara's assistant governor in charge of the sector, told the Nikkei Asian Review.
The move comes after the central bank's recent steps to beef up competency in the banking sector. All reporting by banks to the central bank will have to be signed by a chartered banker, effective 2021. In addition, bank managers working in "critical" areas like credit, risk management and combating money laundering will have to earn further specialized qualifications.
INCEIF previously conducted chartered Islamic finance professional postgraduate programs, but they were academic in nature. The programs were discontinued in 2014 and replaced with master's in Islamic finance practice to better reflect their academic credentials and prevent misunderstanding of the professional term "chartered."
The Islamic Banking and Finance Institute of Malaysia, another central bank affiliate, will begin running the chartered banking programs. Graduates, once they have enough years of work experience, will qualify as chartered bankers in Islamic finance, just like their peers the conventional banking. The institute's ultimate aim is to introduce the programs abroad to gain global recognition as a professional body for Islamic bankers.
Islamic law prohibits the charging of interest, instead deriving income from profit-sharing between the creditor and the debtor. It is used as an alternative to conventional means of banking, with advocates touting its cost-effectiveness and ethical values.