BUSINESS

BNM TO STRENGTHEN ISLAMIC FINANCIAL SYSTEM IN 2023

29/03/2023 01:14 PM

KUALA LUMPUR, March 29 (Bernama) -- Bank Negara Malaysia (BNM) has outlined its priorities for the Islamic financial system in 2023 that will build upon the strength of the industry’s ecosystem in Malaysia and elevate its contribution to all stakeholders. 

In addition to continuing current initiatives, the central bank said it will focus on modernising shariah contract applications to spur impactful innovations, piloting more value-based solutions, and strengthening ecosystem enablers to advance Islamic finance developments.  

"In 2022, the bank focused on strengthening the role of Islamic finance in supporting a sustainable economic recovery.

“We worked closely with the industry to advance value-based finance to bring greater impact to the economy, community, and environment. 

"We also rallied efforts to sustain Malaysia as a global leader in Islamic finance. These efforts are aligned with the development priorities for Islamic finance as outlined in the Financial Sector Blueprint 2022-2026," BNM said in its Annual Report 2022 released today.

The Islamic banking and takaful industry sustained its growth in 2022, gaining a further share of the overall financial system at 44.5 per cent in terms of Islamic financing while charting a 10.8 per cent annual growth worth RM974.1 billion, surpassing the conventional system. 

Islamic finance has made notable progress in supporting halal businesses over the years, with the use of Islamic finance solutions by halal-certified companies having almost doubled to 41.3 per cent in 2021 from 21.9 per cent in 2018. 

BNM said this success was due to a range of efforts by the industry and the bank, including offering tailored business solutions, promoting close partnerships between halal-related government agencies such as the Department of Islamic Development, and Halal Development Corporation, as well as continuous engagements and awareness programs conducted all year round.  

In March 2022, BNM launched the Malaysia Islamic Overnight Rate (MYOR-i), replacing the Kuala Lumpur Islamic Reference Rate (KLIRR), the first Islamic transaction-based benchmark rate in the world that complies with the Principles for Financial Benchmarks.

Since the introduction of the Strategy Paper on Value-based Intermediation (VBI) in 2017, the Islamic finance industry has facilitated a total of RM302.2 billion in VBI-aligned initiatives, including supporting the climate and sustainability agenda.

Of digital bank licensing, BNM said it is currently engaging with successful applicants to ensure they are operationally ready to start their licensed business. 

“This is part of our efforts to expand meaningful access to and promote responsible usage of, suitable financial solutions to unserved and/or underserved segments," it added. 

Out of the five successful digital bank applicants announced in April 2022, two applicants are to be licensed under the Islamic Financial Services Act 2013.  

-- BERNAMA

 


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