KUALA LUMPUR – The regulation of Lembaga Tabung Haji (TH) under Bank Negara Malaysia (BNM) is an interim solution and will not change the original nature of TH, especially in the management of pilgrims to fulfil the fifth pillar of Islam as stipulated under the Tabung Haji Act 1995 (Act 535), the Finance Ministry said.
“Besides that, haj affairs remain under the responsibility of the Minister in the Prime Minister Department (Religious Affairs).
“From TH’s point of view, the board of directors and its management still have major problems in determining the direction of TH as well as the management and operation of pilgrimages,” the ministry said in a statement today.
It said TH’s regulatory efforts in terms of deposit-taking as well as risk and liquidity management by BNM are an interim solution to be implemented until the findings of the Royal Commission of Inquiry (RCI) is tabled for further government consideration.
“Considering that TH accepts deposits from prospective pilgrims and the public, and the government still guarantees the depositors’ savings under Act 535, it is very appropriate that TH is better regulated and can continue to generate income from shariah-compliant investments.
“The improvement of TH’s regulation is in line with the government’s intention for TH to return to its original mandate, which is to manage depositors’ savings for the purpose of performing haj, in addition to savings for investment,” it said.
The ministry said that TH is considered important to the Malaysian financial system, given its total deposits which now stand at RM82 billion, and its close interconnection with the financial system, especially as the largest shareholder of Bank Islam Malaysia Bhd.
It said that as TH is an institution closely linked to the country’s financial system, with systemic significance, the government needs to ensure that its financial position continues to be improved and strengthened.
“Thus, the regulation under BNM, which is still based on the shariah concept, will strengthen governance and ensure that there is no misuse of funds that can force the government to replace depositors’ money due to government guarantees,” it said.
It said the ministry is well aware of the different mandates and roles of TH compared with other banking institutions, and as such BNM’s current regulatory scope, pending the completion of the RCI, will focus only on deposit-taking as well as risk and liquidity management, with a regulatory framework different from the general rules followed by other banking institutions.
Meanwhile, it said that perceptions of usury would also not arise at all because BNM has a knowledgeable, experienced, and internationally recognised shariah advisory council to advise it.
It added that all these efforts aim to further protect the rights of depositors and ensure that all investments made by TH are based on shariah principles. – Bernama, July 22, 2021
