Bank Negara Malaysia has reaffirmed their efforts to develop a progressive and inclusive Islamic financial system.
“We will sharpen our focus across three major areas, namely, social resilience, climate resilience and business empowerment,” BNM said.
This will entail further diversification in Shariah-compliant financial solutions to address market gaps and innovative approaches in meeting the evolving needs of the society and economy.
BNM believes that these developments together with the value-based focus of the industry will contribute towards further strengthening the Islamic financial sector and enhancing its contribution to Malaysia’s socio-economic growth and development.
In 2020, the industry introduced new products designed to meet the specific needs of the underserved segment. These include benevolent microfinancing for B40 entrepreneurs funded by donations from corporates and affordable financing programs to build houses for zakat recipients.
There was also financial protection for hardcore poor families in the form of takaful riders using donation.
BNM also lent support to the role of Islamic finance in driving the sustainability and climate resilience agenda for the financial system.
“In 2020, we participated in developing detailed guidance (sectoral guides) with the industry via the VBI Community of Practitioners,” the central bank said.
These sectoral guides, which focus on palm oil, renewable energy, and energy efficiency, as a start, will be finalised in the first quarter of 2021. This is part of the industry’s ongoing commitment towards the development of a financial system that supports sustainability and the transition towards a low carbon economy.
Takaful operators have also started to embrace VBI by aligning their corporate strategies and exploring improvements to business practices and operations. The development of the VBI framework for takaful is already at an advanced stage. The Malaysian Takaful Association (MTA) expects to issue the framework in early 2021 to guide the takaful industry on VBI adoption.
BNM has also collaborated with several Islamic banking institutions to explore the deployment of differentiated financial structures to facilitate the liquidity needs of SMEs at different stages of their operations.