Regulatory Framework of Digital Bank and Islamic Digital Bank to Support Social Finance and Financial Inclusion in Malaysia

Azlin Suzana Salim; Mohd Masukujjaman; Hartinie Abd Aziz; Raja Madihah Raja Alias

Authors

Azlin Suzana Salim Department of Accounting and Finance, Faculty of Business Management and Professional Studies, Management and Science University, University Drive, Off Persiaran Olahraga, Section 13, 40100 Shah Alam, Selangor, Malaysia
Mohd Masukujjaman Department of Accounting and Finance, Faculty of Business Management and Professional Studies, Management and Science University, University Drive, Off Persiaran Olahraga, Section 13, 40100 Shah Alam, Selangor, Malaysia
Hartinie Abd Aziz Faculty of Law and International Relations, University Sultan Zainal Abidin Terengganu, Malaysia
Raja Madihah Raja Alias Faculty of Law and International Relations, University Sultan Zainal Abidin Terengganu, Malaysia

Keywords:

Digital Bank, inancial inclusion, Islamic digital bank, social finance

Abstract

Malaysian Financial Inclusion Framework and Malaysian Financial Sector Blueprint led to establishment of digital bank and Islamic digital bank in Malaysia with financial inclusion objective to ensure Malaysian banking policy remain relevant in operationalization of digital bank. The Policy Document on Licensing Framework for Digital Banks issued by Bank Negara Malaysia 2020 clearly specified that licensed digital banks shall be subject to regulatory laws under the Financial Services Act 2013 (FSA 2013) and Islamic Digital Bank shall be subject to the regulatory laws under Islamic Financial Services Act 2013 (IFSA 2013) within the legal and regulatory framework of Bank Negara Malaysia. The aim of this research is to examine the laws and regulations for regulating Digital Bank and Islamic Digital Bank in Malaysia to support social finance in Malaysia. Doctrinal Legal Method is adopted by conducting library research on the primary legal sources and secondary legal source. The principal results disclosed that FSA 2013 and IFSA 2013 are the comprehensive law to regulate banking and finance in Malaysia covering the regulation and supervision of both digital bank and Islamic digital bank in Malaysia. These laws remain relevant for operationalization of digital bank and Islamic digital bank within the Financial Inclusion Framework and Social Finance Framework.