Purification of non-halal income in Malaysian Islamic banks : an overview

Abstract EN

Purification of non-halal income (NHI) is the process of deducting non-halal or tainted income deemed unacceptable by Shairaah from the total income generated in Islamic banks.

It is undeniable that Shariaah non-compliance events still occur in Islamic banking system considering the fact that Islamic banks have not been able to fully comply with the requirements of Shariaah in their transactions, operations and financial activities.

The realization of Shariaah non-compliance events in Islamic banks in some situations involve a financial impact which leads to NHI.

All NHI identified must be purified since Islam does not allow any non-halal income to be held, kept and utilized for their own benefits.

This paper will give a new insight on purification of NHI by first delineating the concept of mal haram in Islam as well as the Shariaah non-compliant events realized in the banks, with special reference to cases involving Islamic banks in Malaysia.