Bank Negara Malaysia issues a new Islamic banking classification mandate that requires institutions to classify money received into Islamic deposits or investment accounts.

Bank Negara Malaysia, the Malaysian central bank, has announced changes to the way banks classify customers' money.

According to the Islamic Financial Services Act 2013, money that Islamic banking institutions accept from customers should be classified into either Islamic deposits or investment accounts. The new law replaces the Islamic Banking Act 1983, which classified all money accepted as Islamic deposits.

"The differentiation will allow the Islamic banking institutions to develop a wider range of products for both classifications to meet the diverse needs of the customers. The latter will also be able to better appreciate the product offerings by the Islamic institutions and make an informed decision in respect of the choices of products," said the central bank. 

Companies practising the old system will be given two years to transition and reclassify their deposits, which will continue to be protected by Perbadanan Insurans Deposit Malaysia. The transition period ends in 30 June 2015.