Maybank Islamic launches foreign currency commodity Murabahah products
Maybank Islamic today expanded its range of foreign currency offerings by launching two treasury products, namely foreign currency deposit and placement, utilizing the Commodity Murabahah principle.
The Foreign Currency Commodity Murabahah Deposit-i (FCMD-i) is a Shariah-compliant liquidity management product to facilitate investors to mobilize their surplus funds into the Islamic financial market. It is aimed at corporate and businesses with revenue inflow denominated in foreign currency, the source of which range from export or trade-related proceeds to all kinds of receivables. These are the segment of customers with a natural hedge position, who have commitments and liabilities in foreign currency to be settled either in the short-term or on short notice. Maybank Islamic also welcomes high net-worth individuals to participate in the program. The minimum deposit in foreign currencies offered is equivalent to RM1 million for a minimum tenure of 14 days.
"It will assist the customers to better manage their liquidity, from the perspective of maximizing profit and minimizing opportunity costs," said Maybank Islamic Berhad's Acting CEO, Ibrahim Hassan.
The Foreign Currency Commodity Murabaha Placement-i (FCMP-i), meanwhile, is a Shariah-compliant liquidity management product which can be used to facilitate interbank transactions. It is a channel through which Maybank Islamic makes available foreign currency denominated funds to the players in the Islamic interbank market.
As a start, the FCMD-i and FCMP-i will be offered in four currencies, namely US Dollar, Euro, British Pound and Australian Dollar. This is consistent with other foreign currency products introduced by Maybank Islamic so far. The facilities for other currency denominations will be rolled out in stages.
The common Murabahah (sale on cost-plus basis) contract will be applicable for both products. However, as the contracts employ the Islamic principle of tawarruq, customers will be required to appoint Maybank Islamic as the agent to make sale and purchase transactions of commodities with a third party on their behalf. The commodity trades have been designed in a manner such that the transaction cost is kept at the minimal.
The launching of the two Shariah-compliant products is in line with Maybank Islamic's strategy to grow its business under the International Currency Business Unit (ICBU). In January, it became the first bank in the country to launch the Offshore Foreign Currency Financing, which is a short term trade financing facility for exporters and importers and the Foreign Currency Account, a Mudarabah deposit account. Maybank Islamic expects its ICBU unit to have a comprehensive range of foreign currency products by the end of this year.
"The ICBU business, along with Islamic investment banking, Takaful and wealth management are the strategic focus of Islamic business for the Maybank group. In this regard, Maybank Islamic is responding to the initiatives rolled out under the Malaysia International Islamic Financial Centre (MIFC). The support and incentives given by the authorities for the Islamic banking players to excel in this area are unprecedented," said Ibrahim Hassan.