Current Practice Of Debt Recovery Methods In Islamic Banks In Malaysia
Debt recovery is an essential activity either for Islamic banks or conventional banks in order to ensure the sustainability of the banks. The bad debt need to be managed properly or else the banks will experience problem with growing level of non-performing loan. One of the problems faced by the banks in collecting debt is defaulted debtor. Many have criticised and voice out their concern over non-ethical debt collection by Islamic banks. Therefore, the aim of this paper is to review the current practice of debt recovery methods in Islamic banks in Malaysia. This research employs the qualitative methodology utilizing content analysis technique. Primary data is collected from books and academic researches. The result shows that the authorities in Malaysia provided good methods and mechanisms for debt recovery in Islamic banks in Malaysia; in term of tools of recovery, procedures, laws and policy. However, still there is a lack in term of enforcement, due this situation, it has affected the debtor. Based on the findings of the study, the study recommended that the Islamic banks should enforce and improve the debt recovery practice according to the laws and policies prescribed.