Shari’ah Governance of Islamic Non-Banking Financial Institutions in Malaysia: A Conceptual Review

  • Azmir Ahmad School of Banking and Finance, Faculty of Business and Management, Universiti Sultan Zainal Abidin Kampus Gong Badak, 21300, Kuala Nerus, Terengganu
  • Muhammad Shahrul Ifwat Ishak Faculty of Business and Management Universiti Sultan Zainal Abidin Kampus Gong Badak, 21300, Kuala Nerus, Terengganu
Keywords: Shari’ah Governance Framework, Islamic Finance, and Islamic Non-Banking Institution.


It is widely recognized that Malaysia is among the leading countries in the Islamic banking industry. This is due to its comprehensive regulatory framework from the Shari’ah aspects, particularly Shari’ah governance. Bank Negara Malaysia (BNM), as the regulator, is closely monitoring all players in this industry so that they can follow all its policies and regulations closely. Nevertheless, the Islamic Non-Banking Institutions (NBFIs), seem to be contrary in this aspect. In fact, it is not compulsory for the NBFIs to adhere to the BNM’s policies, particularly regarding the Shari’ah governance framework. Therefore, this study aims to explore Shari’ah governance practices among selected Islamic NBFIs in Malaysia. Since this study is a conceptual review, it adopts library research to achieve its objective. The finding reveals that there are different practices of Shari’ah governance among the Islamic NBFIs due to different sizes of their institutions and the complexity of their products. While the flexibility may bring benefits for the NBFIs, their respective regulators should enhance the Shari’ah governance aspects by providing a comprehensive policy as well as improving its enforcement particularly from the check and balance perspective. Also, the study suggests that the Islamic NBFIs should establish an association among its members to promote coordination, strengthen the governance, and exchange views, particularly on Shari’ah aspects.


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Author Biography

Muhammad Shahrul Ifwat Ishak , Faculty of Business and Management Universiti Sultan Zainal Abidin Kampus Gong Badak, 21300, Kuala Nerus, Terengganu

Senior Lecturer, Faculty of Business and Management Universiti Sultan Zainal Abidin
Kampus Gong Badak, 21300, Kuala Nerus, Terengganu 


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How to Cite
Ahmad, A., & Ishak , M. S. I. (2021). Shari’ah Governance of Islamic Non-Banking Financial Institutions in Malaysia: A Conceptual Review. The Journal of Management Theory and Practice (JMTP), 2(1), 70-77.
Finance & Economics