Tabung Haji is evaluating shifting its investment arm to SC oversight, with BNM retaining liquidity and financial stability roles, says chairman.
BANGI: Lembaga Tabung Haji (TH) is evaluating a proposed shift in its regulatory framework to place its investment operations under formal statutory oversight.
TH chairman Tan Sri Abdul Rashid Hussain said a joint task force committee, which includes the Securities Commission (SC) chairman and Bank Negara Malaysia (BNM) governor, has leaned toward placing TH’s investment arm under SC’s oversight following extensive internal deliberations.
“After deliberating in detail for almost six months, we concluded that it is more relevant for Tabung Haji to be regulated by the SC.
“However, that does not mean BNM will not be involved.
“We are fine-tuning the framework to ensure all key regulators are involved in TH’s future regulatory structure,” Rashid said during a panel session “Dialog Ummah: Realiti dan Masa Depan Tabung Haji” organised by Himpunan Gerakan Islam Malaysia here today.
He said the primary reason for choosing the SC as the main regulator is that 90 to 95 per cent of TH’s total assets are invested in capital markets rather than held in pure liquidity.
Because the majority of TH’s operations pertain directly to capital market investments, he said SC’s regulatory jurisdiction aligns naturally with the core structure of TH’s portfolio.
While SC is being eyed as the primary regulator for its investment operations, BNM will retain an essential role in overseeing overall financial stability, Rashid said.
“BNM will maintain overarching responsibility over the country’s financial institutions and total financial system stability.
“Liquidity matters will always remain under BNM’s purview,” he said.
He added that liquidity plays a critical role as a secondary fallback to mitigate potential liquidity crises or runs, in the event of a sudden loss of depositor confidence, referencing BNM’s historical role as an informal monitor between 2014 and 2017.
Addressing the legislative changes required to enact the new regulatory framework, Rashid said the proposed amendments to the Tabung Haji Act will be submitted soon. The process will take time due to the necessary stakeholder engagements.
The technical details must ensure that TH remains completely intact as a religious and savings institution, he said. At the same time, its investment arm will be clearly identified and carved out for formal regulatory oversight to guarantee a higher standard of safety for depositors.
“The process of amending an act involves several formal stages.
“The proposal must first be presented to the minister, who will then take it to the Cabinet for approval. Once agreed, it will go through the Attorney-General’s Chambers for final drafting before being tabled,” Rashid added.
