Bank Negara Malaysia has issued a policy document regarding Sharia governance for Islamic financial institutions. The aim is to improve the implementation of Sharia governance and embed Sharia-related considerations in the business and risk strategies of Islamic financial institutions.

The policy document, which takes effect on 1 April next year, applies to licensed banks that are approved to do Islamic banking business.

Sharia banks are growing and becoming more complex. The  requirements in the policy document outline the regulator’s "strengthened expectations" for effective  Sharia-related governance arrangements that ought to supplement the risk strategies of Islamic financial institutions.

The document supersedes the Shariah Governance Framework for Islamic Financial Institutions (2010); paragraph 11.4 of Financial Reporting for Islamic Banking Institutions (issued last year); paragraph 10.4 of Guidelines on Financial Reporting for Development Financial Institutions (issued 2012); and paragraph 13.5 of Financial Reporting for Takaful Operators (issued last February).