The underlying principles that govern Islamic banking are mutual risk and profit sharing between parties, the assurance of fairness for all and the transactions are based on an underlying business activity or asset.
- Islamic banking refers to a system of banking that complies with Islamic law, which is also known as Shariah law.
- Islamic banking in Malaysia began in September 1963 when Perbadanan Wang Simpanan Bakal-Bakal Haji (PWSBH) was established, as an institution for Muslims to save for their pilgrimage to Mecca expenses.
- The first Islamic bank in Malaysia was established in 1983.
- In 1993, other banks such as commercial banks, merchant banks and finance companies were allowed to offer Islamic banking products and services under the Islamic Banking Scheme (IBS). Currently, there are 16 banks in Malaysia that offers Islamic banks products.
- Other non-bank intermediaries offering syariah based products are Malaysian Building Society Berhad (MBSB) and cooperatives registered under the Cooperative Commission of Malaysia (SKM).
