Table of content Introduction ................................................................................................................................ 2 The Emergence of Islamic Banks ................................................ Error! Bookmark not defined.

Economic Impact of Interest ....................................................................................................... 4 BANK ISLAM MALAYSIA BERHAD (BIMB) ........................ Error! Bookmark not defined. Lembaga Tabung Haji (Pilgrims Fund Board) ............................. Error! Bookmark not defined. Pusat Pungutan Zakat (Zakat Collection Center) ......................................................................... 5 Islamic Banking Concepts ........................................................... Error! Bookmark not defined. List of Financial Institutions Offering Islamic Banking Services............ Error! Bookmark not defined. Islamic Banks ......................................................................... Error! Bookmark not defined. Commercial Banks ................................................................. Error! Bookmark not defined. Finance Companies ............................................................... Error! Bookmark not defined. Merchant Banks Discount Houses ............................................................. Error! Bookmark not defined. ............................................................ Error! Bookmark not defined.

What is the size of Islamic finance in Malaysia total financial sector? ......................................... 7 Malaysia per capita Income ......................................................................................................... 7 Concluding remarks .................................................................................................................... 8

Introduction

A major development in the Muslim world in the seventies and eighties National Islamic Movement. This movement aims to revive the glory of Islam and Began to require the application of Islamic law in all aspects of life and Efforts to develop Islamic banking is one of the manifestations of this movement. The two countries began to rediscover Islam and Muslims Sought to mold economic and financial activities in accordance with Islamic values, witness the emergence of seventy and eighty-century on a number of Islamic banks and financial institutions and the media Operations differ from conventional banks. The creation of such institutions is one of Several aspects of return "to religion," the movement that is gaining Force quickly to these communities of the girl (citing Abu-Hassan et al 1991: 155) Muslims

around the world busy for a very long time by the Western media The social and economic thought. He laughed many Muslim countries in the world culturally, economically and politically by the colonial powers. Although the independence of the colonial powers, and always deeply rooted colonial Principles in the social, political, economic and cultural life of the Muslim community. Thus, the emergence and expansion of Islamic banking is the beginning of to change to break a new path in the Muslim world. It Process to free Muslims from the yoke of Western hegemony Thought, values and institutions, and restructuring of their social and Economic life under Islamic law. Wearing a long problem The Muslims have the same problem as such is under the pot, and discuss A suggested a major factor in the port down Participate in economic activities Malays in Malaysia. And my school is an important step towards a financial interest without the system in Malaysia. This marked the creation of more Islamic farms Institutions under the new situation of the policy of Islamization by Dr. Mahathir Mohammad

The emergence of Islamic banks

The foundations of modern Islamic banking date back to mid-1940. Develop models Islamic banking in the mid-1950s, but the concepts of complete and No detailed information on the banking sector without the benefit does not seem 1960s.Political in the environment during this time, almost all Muslims Countries do not lead to a change in the banking system and financial system As a whole. In fact, was founded the first Islamic bank in the experience of Dumping of dead civilians, and Egypt in 1963. Was a model for experience German savings banks to change to comply with the principles of Islamic law, This means that it is forbidden by the payment of support and interest. However, Charter Bank did not refer to Islamic law adopted by the second Islamic Conference of Foreign Ministers in 1973 and a document on building " Islamic banks, schools and Islamic economy "in 1974 The creation of the Islamic Development Bank (IDB), and as a result of this Conference? Become a Member States of the Organization of the Islamic Conference Members of the Islamic Development Bank. This has helped to establish the Islamic Development Bank A number of Islamic banks in different countries. In 1974, has created many Islamic banks, including: Dubai Islamic Bank for the year 1975, the Faisal Islamic Bank in Sudan in 1977 Faisal Islamic Bank of Egypt and Jordan Islamic Bank in 1978, and Islamic Bank of Bahrain in 1979, in the Muslim world and international investment Development, Luxembourg in 1980 and 1983 BAMB? Today there are more One hundred financial institutions and who claim to work partially or totally Are irrelevant in 34 countries in the adoption of Islamic finance At the national level in Pakistan, decided to Sudan and Iran, and those who The Islamization of the banking system as a whole. Iran has adopted a new banking law In August 1983, requires the abolition of interest in March 1985 (MNSiddiqui 1988: 48). Sudan has decided to change the total when a presidential decree published in 1984, and directing all banks to stop dealing with interest. Directed to the Central Bank of Sudan, 10 December 1984, all commercial banks Stop dealing with interest, and negotiate with immediate effect Transfer of deposits and deposits in the investment or any other type of Deposits in accordance with the provisions of the law is an interest rate of progress Outstanding to be settled by payment or been converted to forms of Islam Funding. Foreign transactions to proceed on the basis of charges there is also another way

The Theory of Islamic Banking

Economic Impact of Interest In the beginning, and the departure of the Islamic financing is the largest prohibiting the wearing of traditional and encourage the sharing of profit and loss (PLS) as an alternative to wear. Ban an obvious interest in the Qur'an and Sunnah. Usury originally meant "to increase and growth." the meaning of the Quran (22:05). Increase the capacity of the capital increase, more than nominal value, and to be larger or smaller. According to Islamic law, riba refers to the excellent technique must be paid by the borrower to the lender the original amount as a condition for extending the maturity. In 1992, the Federal Shariat Court in Pakistan on the following issues:

There is no difference if the loan is for consumption or for commercial purposes. It does not matter if the interest rate is high or low, simple or compound for short or long, and between two Muslims or between the citizen and the state or between states of any increase in the principal amount of the Loan pre-defined in a non-issue to be worn at all times (K. Zaheed quoted in 1994: 83) This leads directly to the essence of Islamic finance and Islamic finance is a financial institution operating in accordance with the principles of Islamic law. If we compare the Islamic traditional, we can say that while the latter gains much of its income and expenditure on the basis of interest, and the former president to earn the same profits. In the operation of an Islamic bank, and therefore assumed a place of interest in banks. "Clothing" and the original name of the presentation.

Bank Islam Malaysia Berhad (Company B)

Foundation was created after the age of my Islamic bank (IBA) in 1983, IBA has been authorized to establish the first Islamic bank in Malaysia. BIMBI paid capital of 100 million Malaysian ringgit and the authorized capital of RM 500 million to conduct their activities without interest. Tengku Razaleigh and Minister of Finance, the Islamic Bank, and described as follows: The first step in the government's effort to inculcate Islamic values in the economic and

financial system of the country to replace the current Western economic system ( NST July 6)

Lembaga Tabung Haji (Pilgrims Fund Board) In line with the concept of Islam and the Declaration of religion and their way of life in this world and the Hereafter, and Almighty God ordered all Ibadah is the point in this world and the next. To achieve this desire to perform the Hajj pilgrimage, and Muslims must find enough money for a trip to the Holy Land. To avoid wear and tear "which is forbidden in Islam and Muslims to resort to traditional methods different to the rescue? Of course, there are those who have their animals, or characteristics of inherited cash to cover the cost of the pilgrimage , a practice that has developed in the end, the economic burden on them and their families during Hajj, or when returning from a pilgrimage. This is not good news for the rural economy, with a late economic growth in the country. To do this, and help Muslims to save enough money without engaging in activities that are considered taboo in Islam, and appointed Wang Simpanan Perbadanan Grocery stores in November 1962, Haji began work in September 30, 1963. management company savings of Muslims intending to perform Hajj, and the result was a document entitled "Rancangan grocery store Ekonomi Membaiki Haj" presented by Professor Aziz Royal Ungku in 1959 was to improve the economy for the pilgrims. Objectives: Enable Muslims gradually save enough money to cover the cost of the Hajj, or other expenses are useful to enable the Muslims, through the use of their savings, take an active role in investing in capital in a sense, is Halal in Islam, and to provide protection, supervision and care for pilgrims of Hajj.

Pusat Pungutan Zakat (Zakat Collection Center) Created by the Council of Islamic Federal Territory, Kuala Lumpur (known as MAIWP) began operations in 1991 IST. PPZ method uses corporate governance through the creation of the Council and the appointment of a company called Hartasuci Sdn. Bhd. Is called the base was put under Yayasan Wilayah Persekutuan Berhad piety, controlled by the Council. PPZ primary responsibility is to collect alms for the Council. He is not responsible for the distribution of zakat, which is made by other agencies / sections of the Council.

The organizational structure externally, and placed under the PPZ organization responsible to the Council. Internally, PPZ HAS Board of Directors chaired by the ministry, which was supervised by the Director General. There are two divisions of the derivative, the Operations Division (headed by the director), and the Division of Finance and Administration. Each section in turn and functional units are different. The core functions of the PPZ:

To explain to the public about the responsibility to pay the Zakat and almsgiving. To help pay for individuals and businesses, and the calculation of Zakat. To collect zakat and increase the collection, both in quantity and pay.

Collection of all-in-the World Bank immediately in the calculation of house money (the Federal Territory Islamic Council). Apart from officials of the above responsibilities EST PPZ Also the production of daily and monthly reports and quarterly and annual reports for both the management and use of the Security Council.

Mode: The guiding philosophy of doing business in SFA is to the responsibility of Zakat Ibadah or feel that there is a duty that is easy to do, and this contributes to their wealth to purify the soul, and can give them a feeling of great satisfaction and relief. PPZ emphasis on communication with the community and remind them of the Muslim religious duty. The discussions, newsletters, posters, reminders and explanations through the media by mail or directly on the prospects of some of the methods used by PPZ. RELATED PPZ more to educate the Muslim public rather than the use of force or law. Self-awareness is more efficient and more attractive to the educated public.

Preferences motivation: most prefer to pay obligations to the Zakat in the month of Ramadan, so they can pay all bad as zakat (zakat on wealth) and zakat al-Fitr (Zakat on self ), and in January, is a sincere person on the opponent to pay tax for that particular year. Thesis 2 months up 65% of games a year. Please prefer to come to the counter to pay Zakat because they like the

act of Akkad (celebration), but it is a must are another payment from the salary-mail, send a representative to the center and pay the zakat on banking in selected major banks in the country where they were appointed agents by the Islamic Council What is the size of Islamic finance in Malaysia total financial sector? The Islamic banking institutions more than $ 11 billion of assets at the end of 2010 a significant increase on last year's $ 7.7 billion. Although this growth rate represents an increase of almost 50%, and the total is still about 3% of total banking sector assets in the country. This is a far cry from 20% of banking assets in Malaysia, which held all the lenders in this Islamic country with Islamic banking assets in Indonesia in percent, equivalent to only 9% of Malaysia in 2010, according to data published by the Central Bank of Indonesia.

Malaysia per capita Income

Country 2000

2001

2002 2003 2004 2005

2006

2007

2008

2009

2010

2011

Malaysia 10,700 10,300 9,000 9,300 9,000 9,700 12,000 12,900 14,500 15,200 13,800 14,700

Concluding remarks

Islamic finance has been a great success in international financial markets that have taken place to raise global awareness. Islamic finance now has a presence in over 60 countries, especially in Muslim countries. In the context of the financial infrastructure, the Malaysian Islamic financial system, both strong and growing rapidly. Market participants are very diverse, with Islamic banks and investment banks and Takaful companies, development agencies and financial institutions, economies and communities in the management of the money stock dealers, and finance and unity. The aim of this paper is to provide conceptual understanding of the growth of Islamic finance in Malaysia and to explore current and future development. It was noted that participation in the process of Islamic finance requires the development of Islamic finance is a comprehensive and well-established as follows: - facilities, a wide range of products and

services, and the development of the legal system that is good and sufficient infrastructure to support tax competition Finance, and low labor costs, and high levels of ethics business, and appropriate living conditions and cultural performances. It also needs to support adequate human talents that would lead the company and innovation. In addition, a strong regulatory regime in the Islamic financial system to be a magnet past implications of this document is to provide a platform for industry players and regulators to highlight the recent developments in Islamic finance in Malaysia.