'Sadaqah House' concept to complement Islamic banking system

Farhana Syed Nokman

KUALA LUMPUR: The proposed ‘Sadaqah House’ financial concept, which has been mooted to complement the country’s existing Islamic banking system, will help strengthen the system’s reputation of “placing people before profits.”

“The concept will focus on how Islamic banking benefits people's welfare and emphasise on instruments relating to Islamic shariah.

“Social benefits include initiatives such as waqf, zakah and sadaqah.

“These initiatives could be explored to achieve a more balanced economic growth and to perfect the Islamic economic system,” Deputy Minister in the Prime Minister's Department Datuk Dr Asyraf Wajdi Dusuki said at a press conference after the launch of the Sadaqah House Report 2017 here, yesterday.

In determining the viability of the Sadaqah House to be implemented within the Islamic banking framework, four important areas were duly investigated, namely, legal, shariah, governance and taxation.

The research found that the implementation of Sadaqah House is feasible in the Islamic banking environment as a banking product, or as an incorporation of a subsidiary or foundation.

Its proposed establishment could be seen as an effort towards perfecting the Islamic economic system that consists of three crucial components, namely, government, private and welfare.

Sadaqah House is rooted in a speech by Royal Award Winner at the Global Islamic Finance Forum 2014, Datuk Dr Abdul Halim Ismail, who called for further exploration of the concept of sadaqah in Islamic banking as an instrument for socially-beneficial endeavours.

The call was in line with the aspirations of Bank Negara Malaysia, as stated in its Financial Sector Blueprint 2011-2020, which incorporates a financial inclusion agenda within the banking framework.

The research was spearheaded by International Islamic University College with its strategic partner, Bank Islam Malaysia Bhd.