The Hire Purchase (Amendment) Act 2026 took effect on 1 June 2026. For Islamic banks, the impact goes beyond standard HP agreements. Four key Shariah contract types are directly affected by the new digital signing and disclosure requirements.

At the same time, Islamic banks must ensure that any digital signing workflow aligns with both Shariah standards and Bank Negara Malaysia (BNM) requirements, a dual compliance challenge unique to this segment.

The 4 Shariah contract types affected:

✅ AITAB agreements (Al-Ijarah Thumma Al-Bai') can now be executed digitally under the new Act.
✅ Shariah disclosure documents must now include mandatory EIR disclosure under the reducing balance method.
✅ Profit rate schedules are subject to the new calculation framework under the reducing balance method.
✅ Wakalah forms used in Islamic HP financing are subject to the new digital execution framework.

Additional compliance considerations:

✅ Identity verification is mandatory before entering into a hire purchase agreement.
✅ Dual-language digital workflows must meet both Shariah and BNM standards simultaneously.
✅ The Act recognizes both electronic signatures (ECA 2006) and digital signatures (DSA 1997) with different legal standing.
✅ The signing standard chosen directly affects the legal admissibility of digitally executed AITAB agreements. For Islamic banks, this must also align with Shariah compliance standards.

Grace period ends March 2027.