The Shariah-compliant financial instrument will provide the Islamic financial market with a viable alternative to the conventional Repurchase/Reverse-Repurchase Agreements (Repo/Reverse Repo).
“Given Malaysia’s strong global leadership position in Islamic finance and sukuk market development, efficient and liquid secured funding is expected to further enhance the vibrancy and resiliency of the financial markets,” said Ahmad Shahriman Mohd Shariff, chief executive officer, CIMB Islamic.
In a joint statement with Standard Chartered, he also said that a secured funding instrument such as the CCM is important for most central banks with open market operations to adjust liquidity in the financial system.
All transaction proceeds of the CCM will be earmarked to eligible Shariah-compliant assets/projects, which include assets/projects that aim to generate positive social impacts for vulnerable segments, such as affordable housing, start-ups and SMEs, public schools, as well as positive environmental impacts via projects such as green mass transit, climate resilient buildings and infrastructure, sustainable forestry and wildlife conservation projects.
Meanwhile, Mohd Suhaimi Abdul Hamid, chief executive officer of Standard Chartered Saadiq Malaysia said the deal underpins both banks’ devotion to continue the innovative development in the environmental, social and governance space (ESG) as well as their common objectives to further advance the suite of Shariah-compliant products.
He added that this transaction aligns with the bank’s aspiration to lead in ESG product development, with Saadiq continuing to offer innovative Islamic solutions that leverage on its international Islamic banking network across Asia, Africa and the Middle East.
He opined that with the Islamic finance industry focusing on Shariah-compliant solutions that align with the United Nations’ SDGs and ESG, this transaction will further strengthen Malaysia’s position as an international Islamic financial hub.
Witnessing the event, Adnan Zaylani Mohamad Zahid, assistant governor of Bank Negara Malaysia, noted that the Islamic finance industry is in a strong position to facilitate the transition towards sustainable practices.
“Islamic financial institutions play a major role in driving the sustainability agenda in Malaysia,” he added.