Bank Negara said that it had sent advisory notices to Lembaga Tabung Haji on its risk management practices but said that the pilgrimage fund has taken corrective measures and is headed towards "a sustainable and healthy financial position".

"In relation to Lembaga Tabung Haji, the institution has proactively taken appropriate measures to further strengthen its risk management practices, both on its own initiative and in response to earlier engagements with the bank," the central bank said in a statement today.

"These will reinforce a sustainable and healthy financial position of the institution, going forward," added Bank Negara.

However, the statement did not mention nor confirm or deny if the images of letters circulated online recently, purported to be from the central bank to the pilgrimage fund, were genuine or in any way linked to Bank Negara's stated "engagement" with Tabung Haji over its "risk management practice".

The leaked documents purportedly detailed the central bank's alleged advisory to Tabung Haji over its slipping reserves and the declining value of its investments.

Bank Negara explained that while Tabung Haji is not a banking institution, its inter-linkages with the financial sector made it an entity which is under the indirect ambit of the banking industry regulator.

"While Lembaga Tabung Haji is not under the direct supervision of the Bank, advisories issued by the bank to non-bank financial institutions are aimed at ensuring the institutions will continue to be well managed and effectively perform the role for which they have been established. This in turn will contribute to financial stability," it said.

Surveillance part of mandate

The surveillance of non-bank financial institutions, it added, is part of its mandate to promote financial stability in significant non-bank financial institutions that have important inter-linkages with the financial system.

The central bank said this is supported by the establishment of the Financial Stability Executive Committee (FSEC) under the Central Bank of Malaysia Act 2009 which is chaired by the Bank Negara governor.

Other members include the secretary-general of the Treasury, the chairman of the Malaysia Securities Commission, the chief executive officer of the Malaysia Deposit Insurance Corporation and an independent external member.

"Based on the bank’s surveillance, the bank and the FSEC may, from time to time, issue advice to significant non-bank institutions as a pre-emptive measure to promote the sound financial standing of such institutions and avoid any systemic implications on the financial system, " said the central bank.

The leak of the alleged Bank Negara advisory to Tabung Haji has caused a furore among the public and depositors, already uncertain with the fund's financial direction after its controversial investments into Felda Global Ventures and 1MDB which some claim had depreciated, if not evaporated outright, almost overnight.

A campaign asking depositors to withdraw their funds from Tabung Haji was launched not long ago over similar concerns with the fund's financial management.

The revelations also caused brickbats to fly at Tabung Haji chairman Abdul Azeez Abdul Rahim, who has refuted claims that the pilgrimage fund is on the rocks, assuring everyone that "all is well".