Maybank Islamic Berhad (MIB) today launched a special Shariah Compliant trade finance solution named Collateral Management Arrangement-i ("CMA-i"). This is a tailor-made financing solution for middle market and corporate customers who are involved with commodity-based products.
CMA-i is a commodity-based financing arrangement that entails a tri-partite agreement between the Bank, customer and a collateral manager who controls and manages the commodities to be financed by the Bank. The arrangement is customised to finance the various stages of a commodity trade transaction cycle and is secured against the control / rights over the commodity by the Bank. The risk evaluation by the Bank would be more focused on the collateral valuation of the commodity instead of just the customer's financials and track record.
Financing available under CMA-i includes Islamic Trade Finance products such as Accepted Bills-i and Trust Receipts-i.
Executive Vice President of Maybank Islamic, Ibrahim Hassan said that the introduction of CMA-I marks a milestone in the Bank's product offering.
"As a leader in Islamic trade financing, with a market share of 38.8% as at June 09, Maybank Islamic is committed to introducing a diverse range of financing solutions for our trade customers," he said. "We currently offer approximately 30 trade financing products and with this new product, we are targeting to see our Islamic trade finance volume grow by around 10% this year."
Ibrahim said the commodities that can be securitized and financed under this arrangement include steel, copper, aluminum, nickel, zinc, tin, crude oil, gasoline and others acceptable to the Bank.
CMA-i not only covers commodities that are produced in Malaysia for export or distribution in local markets, but also those that are imported into the country. The commodities can either be in the form of raw materials, semi-finished products or finished products.
Maybank Islamic has also introduced Commercial Industrial Hire Purchase (CIHP) based on the Shariah contract Al-Ijarah Thumma Al-Bai (AITAB) for sole-proprietorships, partnership, Private Limited and Public Limited Companies. It refers to a hire-and-sell concept whereby the financier (Maybank Islamic) will purchase the vehicle / equipment / machinery which are classified as Non Act Goods and subsequently hire it to the potential customer on agreed terms and conditions and for tenures ranging from three to five years.
Ibrahim said that the introduction of these two new Islamic financing solutions will assist customers to improve their cash flow and liquidity position, particularly during the current challenging economic environment.
He added that customers would also benefit from the various incentives offered under the Islamic banking scheme.
"In addition to the 20% stamp duty discount given for all our existing Islamic financing products, CMA-i is also being offered at competitive rates with affordable fee structures," he said.
"Given these benefits, CMA-i offers a viable financing solution to our business customers. With the recently launched Commodity Murabahah Term Financing ("CMTF-i") and Murabahah Term Financing ("MTF-i"), we are targeting to provide our customers a comprehensive financing solution that can significantly contribute to our 15% growth target in Maybank Islamic's overall financing portfolio for the financial year ending June 2010. To date, Maybank Islamic has more than RM9.8 billion in total financing to the business sector," added Ibrahim.
CMA-i and CIHP are Maybank Islamic's latest mainstream banking products introduced since it commenced operations on 1 January 2008. Maybank Islamic was recently awarded "Best Islamic Trade Bank in Asia 2009" by Trade Finance Magazine.