KUALA LUMPUR – Datuk Seri Tengku Zafrul Tengku Abdul Aziz said placing Lembaga Tabung Haji (TH) under the regulation of Bank Negara Malaysia (BNM) will improve the pilgrimage fund’s overall management and operations due to its importance to the country’s financial system.
The finance minister said the move was also taken to safeguard the interest of depositors and strengthen TH’s financial position in fulfilling its mandate, in line with good governance standards set by the United Nations Convention Against Corruption (UNCAC).
“In line with the establishment of the royal commission of inquiry (RCI) relating to TH, the government continues to strongly support the ruling under Article 3(1) of the federal constitution on Islam as the federal religion and TH will remain the leading agency, especially in the management of haj pilgrims to fulfil the fifth pillar of Islam.
“Accordingly, the government wants to give its commitment that the improvement in TH’s operations is aimed at protecting and improving the interests of depositors, apart from ensuring TH’s financial strength will continue to contribute to the stability of the country’s financial system,” he said in a statement today.
Therefore, he said the proposal for a more formal regulatory arrangement under BNM would place TH as a prescribed Islamic financial institution under Section 223 of the Islamic Financial Services Act 2013 (Act 759) and enhance the long-term sustainability of TH.
Tengku Zafrul said BNM was given the responsibility under the Central Bank of Malaysia Act 2009 (Act 701), among others, to preserve the stability of the country’s financial system.
He said to implement this mandate, BNM has been empowered under Act 701 as well as Act 759 including to regulate financial institutions of a systemic nature, subject to the governance requirements contained in the relevant acts.
The minister said the same approach had been adopted in regulating development financial institutions established with specific mandates such as Bank Simpanan Nasional (BSN) and Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat).
“Therefore, BNM’s regulatory framework proposal for TH will be tailored based on the characteristics and risks of TH’s business model, namely ‘fit-for-purpose regulation’, not necessarily the same as other banking institutions,” he said.
Tengku Zafrul said the regulation by BNM was also needed to create check and balance in line with the ruling by the special cabinet committee on anti-corruption.
He said TH depositors will continue to enjoy government guarantees as currently.
In a related matter, Minister in the Prime Minister’s Department (Religious Affairs) Datuk Seri Zulkifli Mohamad Al-Bakri said BNM’s oversight of TH will not in any way erode the rights of his portfolio nor Malaysia’s Muslim population on the pilgrimage fund.
“Having checks and balances via the expertise of a body like BNM will ensure TH is on the right path.
“Due to its importance to Muslims, the first step to empowering TH is to ensure good corporate governance and public confidence is not tarnished by any doubt. We will continue to protect the rights of Muslims through improvement of TH,” he said.
Separately, TH has assured that it will strengthen its corporate governance to continue to safeguard the interests of all its 8.3 million depositors.
In a statement today, TH said the proposal to improve its management and operations, as well as the setting up of a royal commission of inquiry (RCI) to investigate issues arising from audits carried out by consultants from 2014 to 2020 would not disrupt its operations.
“TH’s daily operations will continue to run as usual,” the statement said.
The pilgrimage fund said its total deposits, which currently stands at RM82 billion and is at its highest to date, reflected the people’s confidence and trust.
“TH is now on the right track with a stronger and more stable financial position,” read the statement.
On Wednesday, Deputy Prime Minister Datuk Seri Ismail Sabri Yaakob announced that the cabinet had agreed to set up an RCI under the Commission of Inquiry Act 1950 (Act 119).
TH also assured that the absolute rights of the management and operations of haj, as well as the government’s guarantee on the deposits as stipulated under Section 24 of the Tabung Haji Act 1995 would remain intact.
The statement also said that the proposal to improve TH’s management and operations would involve a new policy model and a review of amendments to the Tabung Haji Act 1995.
In this regard, TH proposed that a comprehensive study be conducted by the Prime Minister’s Department, the Finance Ministry, Bank Negara Malaysia to evaluate the proposed new policy model by taking into account the existing capacity including assets, liability, human resource expertise and others.
“The aspect of good governance, integrity and TH’s reputation as an Islamic financial institution is important to ensure the public, especially our depositors remain confident with TH,” it said.– Bernama, July 18, 2021
