The Southeast Asian nation will also start a cross-border clearance platform for Shariah-compliant bonds, or sukuk, around the same time, Bank Negara Malaysia Governor Zeti Akhtar Aziz said in an interview in Jakarta yesterday. The initiatives are part of a plan to help fill gaps in the $1 trillion global Islamic finance industry.
The Islamic finance industry lacks a commercial institution capable of handling very large deals that conform to the religion’s ban on interest payments. Demand for services complying with Shariah law is increasing as the wealth of the world’s 1.6 billion Muslims rises, spurred by Asian economic growth and crude-oil income in the Persian Gulf.
The mega-bank will be jointly established by a consortium of shareholders from different countries, Zeti said, without providing names. It will be formed by institutions from Asia and the Middle East and have a capital of at least $1 billion, she said in October. The central bank had planned to award the license last year.
“Islamic banks need to have scale to undertake cross- border transactions,” Zeti said yesterday. “They are coming together and bringing a top quality team.”
Malaysia, which pioneered Shariah-compliant finance 30 years ago, plans to unveil a new finance sector master plan in September in a bid to further cement its role, Zeti said. A cross-border clearance platform for Islamic bonds will be launched in the third quarter, Zeti said.
“This is to facilitate efficiency in the transaction, otherwise foreign currency sukuk would have to be cleared out of different time zones,” she said. “We can now have it within our time zones.”