Page 79 - EXIM-Bank_Annual-Report-2023

Management Discussion and Analysis Ensuring Sustainability Commitment to Lead Upholding Accountability Financial Statements 77

DiSClOSuRE ON

ShARiAh GOVERNANCE

EXIM Bank offered Shariah compliant products and services, which include Islamic financing and takaful facilities, alongside its
conventional business facilities in meeting cross-border business requirements. The conduct of Islamic financing business by the
Bank is regulated mainly by the relevant provisions in the Development Financial Institutions Act (DFIA) 2002 and governed by
regulations issued by Bank Negara Malaysia (BNM) from time to time.
Shariah compliance businesses of the Bank is being well guided by robust Shariah governance infrastructure, policies and
procedures, which aligned with BNM’s Shariah Governance Policy Document (SGPD). The Bank’s Shariah governance ensures
compliance through oversight from the Board of Directors (the Board), day-to-day management responsibilities, and support from
an independent Shariah Committee and its secretariat. This framework manages Shariah Non-Compliance risk through various
functions, like Shariah risk management, Shariah review and Shariah audit.

SHARIAH CoMMIttEE
Shariah Committee has the responsibility to provide objective and sound advice to the Bank to ensure that its aims and
operations, business, affairs and activities are conducted in compliance with Shariah requirements. The Board holds ultimate
responsibility for Shariah governance and compliance at EXIM Bank, with guidance from the Shariah Committee on matters
concerning Islamic finance.

Duties & Responsibilities
Specifically, the functions and responsibilities of the Shariah Committee are, inter alia:

1. Providing decision or advice to the Bank on the application of any Shariah Advisory Council (SAC) of BNM rulings or standards
on applicable Shariah matters for the operations, business, affairs and activities of the Bank.
2. Providing decision or advice on the operations, business, affairs and activities of the Bank, which may trigger a SNC event and
to be accountable for the quality, accuracy and soundness of its own decision or advice.
3. Deliberating SNC findings from any relevant functions and endorsing rectification measures for SNC events.
4. Establishing robust methodology to guide its decision-making process. The Shariah Committee must take into account relevant
business and risk practices in arriving at a decision or advice.
5. In the event where the Shariah Committee recommends additional restrictions in applying SAC rulings, the Bank will:

i. Document the Shariah Committee’s decision-making process and rationale;
ii. Seek the Board’s perspective on the Shariah Committee’s decision regarding SAC rulings;
iii. Promptly inform BNM of any such decisions or advice.

6. Shariah Committee have rights to delegate some of its functions to any department in the Bank in endorsing and validating
products guidelines, marketing advertisement, sales illustrations and brochures for the Bank’s products and services, as well
as delegating its power and authority to the Bank’s Shariah control functions in reviewing the level of Shariah compliance,
particularly with regards to the actual implementation and operation of the Bank’s Islamic financial contracts.
When delegating Shariah Committee responsibilities, the following procedure will be followed:

i) Areas of delegated authority by the Shariah Committee and operating procedures are set out clearly in the Bank’s internal
policies.
ii) Reporting arrangements are established to keep the Shariah Committee informed of the work, key deliberations and
decisions on delegated matters.
iii) The Shariah Committee remains fully accountable for the decisions and any ensuing implications arising from the delegated
responsibility.