Islamic Finance Development

Islamic finance has become one of the key sectors in Brunei Darussalam's financial services industry. Prominent for its strong Islamic philosophy, Brunei Darussalam envisions itself to become an international Islamic financial hub. In light of this, BDCB continues to support the development of a sound and progressive financial sector, and in doing so, has identified Islamic finance as a key focus in its Financial Sector Blueprint 2016-2025.

Brunei Darussalam embarked on its Islamic finance journey with the establishment of the first Islamic financial institution in 1991. Three decades later, the Brunei Darussalam Islamic financial sector has multiplied in terms of the number and types of financial institutions. Brunei Darussalam embarked on its Islamic finance journey with the establishment of the first Islamic financial institution in 1991. Three decades later, the Brunei Darussalam Islamic financial sector has multiplied in terms of the number and types of financial institutions.

Did you know? Islamic finance contributes to
                57.5% of the total assets of the financial sector as of 2020, which was recorded at BND 22.3 billion.

Brunei Darussalam's Islamic finance industry currently comprises 11 financial institutions.

11 financial institutions

In addition to the FSBP, BDCB also introduced the Brunei Darussalam Islamic Finance (BDIF) initiative in 2017 to support His Majesty the Sultan dan Yang Di-Pertuan of Brunei Darussalam's aspiration for the Sultanate to become an international hub for Islamic finance. BDIF aims to showcase the Sultanate's Islamic finance eco-system since 1991. Information on Brunei Darussalam's end-to-end regulations relating to Islamic finance, market players and their products, as well as educational and training resources to support continuous professional development can also be found on the BDIF website.


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Regulatory Landscape in Islamic Finance

Brunei Darussalam has a dual financial system consisting of conventional and Islamic Finance.

At present, Brunei Darussalam has a two-tier Syariah governance structure comprising of:

  • A centralised Syariah Financial Supervisory Board (SFSB), for which Syariah Finance, BDCB is the secretariat. The SFSB is established under the Syariah Financial Supervisory Board Order, 2006. It has a mandate to ascertain the Islamic law on any financial matter, to issue rulings on matters referred to it, and to advise on any Syariah issues relating to Islamic financial business, activities or transactions.
  • The Syariah Advisory Body (SAB) at the institutional level plays a complementary role to the Syariah Financial Supervisory Board. Its role is to advise the institution on Syariah compliance of banking operations.

Islamic finance activities are governed under the Islamic Banking Order (2008) for Islamic banks, Takaful Order (2008) for the takaful sector and Islamic capital market activities are governed under the Securities Market Order, 2013, and its supplementary legislation the Securities Markets Regulations, 2015 (SMR). These legislations are administered by BDCB providing BDCB the authority to supervise and regulate them in a manner that maintains financial stability. Islamic finance institutions are subject to the same prudential standards and reporting requirements as conventional financial institutions.

BDCB has also introduced additional regulatory requirements that the Islamic Financial Institutions need to comply. These include the Syariah Financial Supervisory Board Order (SFSB), 2006, Notice and Guidelines to Financial Institutions on Syariah Governance Framework, Guidelines on Internal Syariah Audit Framework and Guidelines on The Islamic Product Approval Process under Section 14 of Syariah Financial Supervisory Board Order 2006.


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Secretariat to the Syariah Financial Supervisory Board

The Syariah Financial Supervisory Board (SFSB) Order, 2006 came into force on 16 Zulhijjah 1426 corresponding to 17 January 2006. It provides a framework for the control of administration and business dealings of financial institutions concerning Islamic products and any Islamic financial matters including Islamic banking business, takaful business, Islamic financial business, Islamic development financial business, and any other business relating to Syariah principles.

BDCB, through Syariah Finance, is the Secretariat to the SFSB. Syariah Finance is also responsible in ensuring that Islamic financial institutions businesses are in accordance to Hukum Syara'.


Milestones

Click or drag on the year to find out about the Islamic finance development milestones.

2023

  • BIBD launched the Sustainability Leaders Award
  • BILIF hosted the Brunei Islamic Finance Summit (BIF Summit) 2023

2022

  • BILIF hosted Syariah Advisory Conference (part of the Syariah Advisory Series co-organised with AAOIFI and BIBF
  • Best Emerging slamic Finance Training Institution- Brunei 2021 by the International Finance Magazine at the International Finance Awards 2021
  • BDCB issued the Notice on Application Process of Islamic Product (NAPIP)
  • BILIF awarded the Global Good Governance (3G) Human Resource Development Award 2022 during the 7th annual 3G Awards Ceremony
  • BILIF awarded the GIFA Excellence Award (Islamic Finance Training & Education) 2022 at GIFA 2022
  • BDCB issued four Syariah tandards for Tawarruq, Murabahah, Wakalah and Mudharabah.

2021

  • Inaugural launch of the Standard Chartered Securities (B) Sdn Bhd (SCSB) Islamic window
  • Rebranding of CIBFM to BILIF
  • BILIF hosted BILIF-INCEIF BICAM 2021
  • BIBD Asset Management became a signatory to the UN PRI
  • BIBD launched BND2 billion commitment towards sustainability funding
  • BILIF awarded the Best Emerging Islamic Finance Training Institution- Brunei 2021 by the Global Banking & Finance Review┬« at the Global Banking & Finance Awards
  • BILIF awarded the GIFA Excellence Award (Islamic Finance Training & Education) 2021 at GIFA 2021
  • BILIF received the Award for Contribution to Organisation at the Asia HRD Awards 2021

2020

  • Introduction of BDCB Islamic Bills (I-Bills) to diversify the availability of money market nstruments available in the domestic financial sector

2019

  • CIBFM awarded with the GIFA Excellence Award (Islamic Finance Training and Education) at the 9th GIFA Award Ceremony
  • Brunei Darussalam ranked 10th position in the ICD-Refinitiv Islamic Finance Development Indicator Report 2019

2018

  • Issuance of Notices and Guidelines on Syariah Governance Framework
  • Issuance of Notices and Guidelines on Internal Syariah Audit Framework for Financial Institutions and Banks Offering Islamic Financial Products and Services in Brunei Darussalam
  • Issuance of Guidelines on the Islamic Product Approval Process under Section 14 of the SFSB Order, 2006
  • Introduction of the Syariah-compliant Overnight Standing Facilities by BDCB
  • Establishment of Bank Usahawan to provide Syariah-compliant asset financing and working capital financing for MSMEs
  • CIBFM hosted the Brunei Darussalam Islamic Capital Market Conference (BICAM) 2018

2017

  • Launching of Islamic Finance Showcase and Brunei Darussalam Islamic Finance (BDIF) website and mobile application
  • CIBFM hosted BIIS 2017
  • Brunei Darussalam ranked 9th position from 14th position in 2016 in the ICD-Thomson Reuters Islamic Finance Development ndicator Report 2017

2016

  • Launching of Financial Sector Blueprint (FSBP) 2016-2025 with Pillar II (Competitive and Innovative Financial Institutions) focusing on expanding Islamic finance in Brunei Darussalam

2015

  • Commencement of Stock Exchange Establishment Project

2013

  • Introduction of Securities Markets Order, 2013
  • Introduction of Government Sukuk Al-Ijarah of 6- and 9-months tenors to develop the Brunei Government Securities Yield Curve as a benchmark for Corporate Sukuk
  • CIBFM hosted the inaugural Brunei Darussalam Islamic Investment Summit (BIIS) 2013

2011

  • BIBD began offering online banking services

2010

  • Establishment of Centre for Islamic Banking, Finance and Management (CIBFM) Launching of SBI Islamic Fund in Brunei Darussalam
  • Establishment of Insurans Islam TAIB General Takaful and Insurans TAIB Family Takaful
  • Merger of Takaful IBB and Takaful BIBD into Takaful Brunei Keluarga (TBK) and Takaful Brunei Am (TBA)

2009

  • Launching of BIBD Al-Kauthar Funds

2008

  • Introduction of Islamic Banking Order, 2008 and Takaful Order, 2008

2007

  • Launching of CIMB Islamic Imtiyaz Islamic Fund

2006

  • Introduction of Syariah Financial Supervisory Board (SFSB) Order, 2006 and subsequent establishment of SFSB
  • Launching of Short-Term Brunei Government Sukuk Al-Ijarah to develop the Brunei Government Securities Yield Curve as a benchmark for Corporate Sukuk

2005

  • Launching of Corporate Sukuk Al-Ijarah by IDBB
  • Merger of IBB and IDBB into Bank Islam Brunei Darussalam (BIBD)

2003

  • Perbadanan TAIB began offering SMS banking services

2002

  • Introduction of Pawnbrokers Order, 2022

2001

  • Conversion of Development Bank of Brunei to Islamic Development Bank of Brunei (IDBB)
  • Establishment of Takaful IDBB
  • Introduction of International Insurance and Takaful Order, 2001; Securities Order, 2001; and Mutual Funds Order, 2001

2000

  • Introduction of International Banking Order, 2000

1997

  • Establishment of IBB Kredit Berhad
  • Establishment of Ar-Rahnu Department under IBB

1994

  • Establishment of IBB Securities Sdn Bhd

1993

  • Conversion of International Bank of Brunei to Islamic Bank of Brunei (IBB)
  • Establishment of Takaful TAIB Sdn Bhd
  • Establishment of Takaful IBB Berhad

1991

  • Establishment of Perbadanan Tabung Amanah Islam Brunei (TAIB)