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Saturday, 7 July 2012

Malaysia: Al-Rajhi bank unveils Commodity Murabahah

     Al Rajhi Bank Malaysia on Monday introduced Collateralised Commodity Murabahah-i 
(CCM-i) as a new instrument for its Treasury use and is pleased to be the first Islamic financial institution to adopt such instrument in managing its daily money market transactions. The announcement was made at their Kuantan Branch launching ceremony                                                   which was graced by YAB Dato’ Seri DiRaja Adnan Yaakob, Menteri Besar Pahang. 


On a similar note, in its recent announcement, Bank Negara Malaysia (BNM) has recently introduced the Collateralised Murabahah instrument. CCM-i, based on a Commodity Murabahah transaction and backed by a pledge mechanism, was introduced as an alternative solution in addressing the urgent demand of Islamic banks in managing their liquidity. It is a low credit-risk financial instrument for the Islamic interbank money market players under the Bank Negara Malaysia’s Standing Facility guideline; enabling Islamic banks to tap on liquidity by utilising their holdings of tradable sukuks and other acceptable Islamic securities as pledge for their liquidity requirements. 



“The introduction of CCM-i is another important milestone for Al Rajhi Bank as it has met the requirements of the syariah standards of both Malaysian and Saudi Arabian scholars”, said Azrulnizam, chief executive officer, Al Rajhi Bank Malaysia. 



This is achieved by precluding the principles of Bai’ Al Inah (sale and buyback), Bai’ Dayn (trading of debt), Wa’ad (undertaking) and Tawarruq Munazzam (pre-arranged transaction between multiple parties). 


On a related note, positive development is already underway for the CCM-i in which Treasury members of the Association of Islamic Banks in Malaysia (AIBIM) are reviewing the instrument to be accepted as industry standard. It is hoped that with the coordinated efforts among industry players, and the support from Bank Negara Malaysia and the Shariah advisors; will boost this initiative to another level in developing an internationally accepted Islamic money market that opens up for more cross border transactions in future. 


Al Rajhi Bank opened its first Malaysian branch five years ago in Kuala Lumpur and now has 23 branches in the Klang Valley and other state capital cities throughout Malaysia. It was recently accorded with the Malaysia Service to Care Award 2012 (MSCA) for the category of The Best of Malaysia Service to Care Award (Islamic Banking). 



About Al Rajhi Bank Al Rajhi Bank, the largest Islamic banking group in the world is recognised for being instrumental in bridging the gap between modern financial demands and intrinsic Islamic values. One of the fastest growing and most progressive banks in Saudi Arabia, it owes its banking excellence to its unwavering commitment to Shariah principles and the use of technology to offer diverse products to meet customer needs. The Group has a vast network of over 700 bank branches and remittance centres, 3,500 ATM machines and over 21,000 POS installed throughout the Kingdom. 



Leveraging on its established principles and operations in the Middle East, Al Rajhi Bank ventured out as an international bank by setting up its first overseas operations in Malaysia, launched in February 2007. Operating on the same platform as the home bank, Al Rajhi Bank Malaysia extensively uses the latest banking technology to consistently provide customers with speed and convenience in banking. To date, it has 23 branches, 15 in the Klang Valley, one in Johor Bharu, Melaka, Penang, Kuching, Kota Bharu, Ipoh, Kuantan and Kota Kinabalu respectively. 



Plans are in the way to open a few more this year. Al Rajhi opened it Affluent Banking flagship branch in Menara BRDB in Bangsar in 2010 to cater to its high net worth customers. Offsite ATMs are now located in many locations throughout Malaysia, with KLIA and LCCT ATMs deployed in July 2011. Its remittance business, Money Transfer i-Tahweel (“i-Tahweel”) is currently available at its i-Tahweel Centres in Melaka, Klang and Central Market. The services are also offered through any Al Rajhi Bank branch nationwide. 



The bank is expanding its suite of products and services that currently offers customised corporate and investment banking products which include amongst others project financing, term financing, working capital financing, trade finance facilities and cash management services. The Retail banking products includes Savings Account-i, Current Account-i, Personal Financing-i, Charge Card-i, Debit Card-i, Fixed Term Investment-i, Money Transfer i-Tahweel, Automobile Financing-i, Home Financing-i, Structured Home Financing-i and the award winning Al Musafir Card-i. As of February 2012, Al Rajhi has a customer base over 150,000 and the number is steadily growing. 



Al Rajhi Bank has been recognised with the following awards (amongst others): • Financial Insights Innovation Award 2008 (FIIA) Special Citation for Islamic Payment Switch (IPS) for Al-Musafir Card-i • KLIFF Islamic Finance Awards 2010 Most Outstanding Islamic Bank • Islamic Finance news Awards 2010 - Malaysia Deal of the Year - Cagamas Sukuk ALIm - Best Retail Islamic Bank • 2010 IFR Asia Awards Islamic Deal of the Year Award - Cagamas Sukuk ALIm • Financial Insights Innovation Award 2011 (FIIA) Product Innovation (Islamic Banking Product) - Cagamas Sukuk ALIm • Aon Hewitt Best Employers in Malaysia 2011 • Aon Hewitt Best Employers in APAC 2011 • RAM League Awards 2011 - Lead Manager Award Islamic 2010 Programme Value (2nd) - Malaysian Innovation of the Year - Cagamas Sukuk ALIm - Industry Recognition Award • The Asset Triple A Islamic Finance Awards 2011 - Islamic Deal of the Year for Cagamas one billion ringgit Sukuk Al-Amanah Li Al-Istithmar - Best Islamic Deal, Malaysia for Cagamas one billion ringgit Sukuk Al-Amanah Li Al-Istithmar • KLIFF Islamic Finance Awards 2011 - Most Outstanding Islamic Bank • Islamic Finance news Awards 2011 - Best Retail Islamic Bank • 2012 Malaysia Service to Care Award (MSCA) - The Best of Malaysia Service to Care Award (Islamic Bank) • The Asset Triple A Islamic Finance Award 2012 - Best Islamic Structured Product for Wakala bi al-Istithmar Investment Account. 

(Business Times / 25 June 2012)

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Alfalah Consulting - KL: www.alfalahconsulting.com 
Islamic finance consultant: www.ahmad-sanusi-husain.com 
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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