Maybank Islamic launched two new Islamic Term Financing Facilities specifically for businesses.
Commodity Murabahah Term Financing-i (CMTF-i) and Murabahah Term Financing-i (MTF-i) are Term Financing facilities based on the Shariah concept of Murabahah (cost -plus profit). Both facilities are designed for asset acquisitions and refinancing of assets such as landed properties, plant and machinery, vessels and commercial vehicles. CMTF-i can also be packaged for working capital and corporate purposes.
"We are targeting to secure RM750 million of financing for these new products for the next financial year. The launch of these two products given the current challenges is part of Maybank's commitment to provide continuous access of financing to viable local SMEs as well as support the government's various initiatives to ensure sustainability and growth of businesses during this period," said Acting CEO of Maybank Islamic, Ibrahim Hassan.
For CMTF-i, a specific commodity will be identified and used as an underlying asset for the sale and purchase transaction between Bank and the customer. The Bank buys the commodity at cost and sells it to the customer at cost plus profit. The customer will pay the financing amount and the profit to the Bank on a deferred payment basis. The purchase and sale of the commodity by the customer is done simultaneously. As a result, both the customer and the Bank are not subjected to any price and inventory risks. The purchase and sale transactions of commodity between the Bank, the customer and the commodity traders are one of the methods used in Islamic banking to facilitate the provision of financing to the customers.
"We are pleased to offer two new facilities that complement our existing Term Financing-i as an alternative for customers to manage their asset acquisitions and refinancing. CMTF-i and MTF-i adopt the concept of Murabahah, which is a widely accepted global Islamic concept especially by Gulf Cooperation Council Islamic banks. Customers now have the alternative to choose the underlying asset used when applying for term financing. These new facilities once again demonstrate our commitment to offer better value to customers and assist them in sustaining their business growth," added Ibrahim.
Currently, the commodities that are used for CMTF-i are tradable Shariah-compliant commodities such as zinc, tin, lead, palm oil and wheat. CMTF-i is also available in foreign currencies denominations, giving more flexibility to the customers for their domestic and international business operations.
Another method used in providing financing to customers for purchase and refinancing of assets is via MTF-i. The underlying asset used for the sale and purchase transaction is the asset to be purchased or the customer's own asset identified for refinancing.
Both facilities are offered at very competitive profit rates. This is in addition to the 20% stamp duty discount given to all our existing financing products. "Given these benefits, CMTF-i and MTF-i therefore offer significant advantages to business customers. We are targeting for both facilities to significantly contribute to our 10-15% growth target in Maybank Islamic's overall financing portfolio for the next financial year. To date Maybank Islamic has more than RM7.9 billion in outstanding financing to the business sector," said Ibrahim.
CMTF-i and MTF-i are Maybank Islamic's latest mainstream banking products. Maybank Islamic focus is to continue to bring to the market a comprehensive range of ringgit and foreign currency denominated banking products to meet the ever growing needs of Malaysia's individual and business customers.