18 Jun 2012 Al Rajhi Bank unveils its latest instrument for the Islamic finance industry at their Kuantan Branch Launch
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Kuantan - Al Rajhi Bank Malaysia today 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 utilizing 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 Shariah standards of both Malaysian and Saudi Arabian scholars”, said Mr 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).

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