Here is the rewritten article in markdown format with proper headings, subheadings, and bullet points:
Reserve Bank of Malawi Regulation on Non-Interest Banking
The Reserve Bank of Malawi has issued a comprehensive regulation document for non-interest banking, which includes Shariah-compliant financial products. The key points of this regulation are outlined below.
Shariah Governance Requirements
Part III: Shariah Governance
A bank engaged in non-interest banking must establish a Shariah Board or advisors with expertise in Islamic law and finance. The Shariah Board shall review and approve non-interest banking products, certify their compliance with Shariah principles, and oversee innovative product development.
Member Qualifications
Members of the Shariah Board must meet specific requirements, including:
- Being a Shariah scholar
- Having integrity
- Having honesty and professionalism
Prudential Requirements
Part IV: Prudential Requirements
A bank engaged in non-interest banking must comply with liquidity reserve requirements and have an internal audit structure to assess control procedures for addressing specific risks associated with non-interest banking products.
Risk Management Framework
The bank should develop policies, systems, and procedures to identify, measure, monitor, and control risk exposures, including Shariah compliance matters.
Permissible Non-Interest Banking Products
A bank may offer the following products:
- Murabaha (Cost-Plus Financing): A financing product where the bank sells goods or services at a markup.
- Mudaraba (Profit-Sharing Investment): An investment product where the bank and investor share profits based on a predetermined ratio.
- Musaharaka (Joint Venture): A joint venture between the bank and other parties to undertake a specific project or business.
- Diminishing Musharaka (Equity Participation with Reduction in Ownership): An equity participation product where the bank reduces its ownership stake over time.
- Ijarah (Leasing): A leasing product where the bank leases assets to customers.
- Istisna (Construction Contract): A construction contract between the bank and a customer for a specific project.
Regulatory Treatment
Non-interest banking products shall be mapped to conventional products for regulatory treatment, including reporting, risk weighting, and capital charge allocation.
Anti-Money Laundering and Combating the Financing of Terrorism Requirements
Part V: AML/CFT Compliance
A bank engaged in non-interest banking must comply with Anti-Money Laundering requirements, including the Financial Crimes Act 2017 and relevant regulations and directives.
Conclusion
This regulation aims to ensure that banks operating in Malawi’s non-interest banking sector adhere to Shariah principles and regulatory requirements, while maintaining prudential standards and transparency.