Association of Islamic Banking Institutions Malaysia

The Association of Islamic Banking Institutions Malaysia(AIBIM) has launched a standard Wakalah Placement Agreement (WPA).

Touted as first of its kind in the world, the WPA is theculmination of the Islamic banking industry's efforts to standardise theagreement for deposit placements by corporate customers with Islamic financialinstitutions (IFI) and for interbank placements among IFIs under the Wakalahconcept.

A Wakalah (agent) transaction involves two parties:Muwakkil as the principal (depositor) and Wakil as the Muwakkil's agent toinvest funds in syariah-approved transactions.

The standardised WPA for corporates essentially specifiesa common modus operandi for IFIs as the Wakil in investing the deposits placedby their corporate customers under the Wakalah concept.

Likewise, the interbank WPA specifies the modus operandifor deposit placements among IFIs.

Besides cost and resource savings, adoption of thestandardised WPA will promote transparency, consistency, operational efficiencyand robustness in Islamic deposit placement transactions, AIBIM said in astatement issued at the signing ceremony of the Memorandum of Adoption in KualaLumpur yesterday.

A total of 26 institutions comprising IFIs andcorporations from Brunei, Indonesia, Malaysia and the UK signed the agreement.

AIBIM said the WPA is expected to further enhance theacceptance and practice of Islamic banking in the country as well as worldwide.

--Business Times--