KUALA LUMPUR (Sept 02): Islamic banks have the potential to extend their role to include investment-intermediary functions, Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said.
Zeti said this would require the current Islamic banking system to expand beyond credit intermediation to investment intermediation.
"In evolving into the next growth phase, it remains an imperative for the Islamic banking industry in the global marketplace, to reinforce meeting the very objective of its existence, as an effective form of financial intermediation that serves the real economy and that complies with the requirements of the Syariah.
"In performing investment intermediation, Islamic banking institutions not only strengthen further the linkage of finance and real economy activity, but also contribute towards more inclusive and more balanced growth," she said.
Zeti said this in her keyote address at the Global Islamic Finance Forum 2014, here today.
She noted that Malaysia, with its Islamic Financial Services Act 2013, has assisted Islamic finance to mature further.
The Act, she said, included new provisions to strengthen the potential role of Islamic financial institutions as investment intermediaries, for effective risk-sharing to take place.
"Legal recognition of investment accounts provides differentiation from deposits, which thereby opens up the avenue for Islamic financial institutions to further explore various modes of operationalising, such investment accounts," she said.
According to Zeti, technology plays a role in developing new platforms to facilitate this area of growth in Islamic finance.
She said a multi-bank platform was being developed in Malaysia, to "effectively and efficiently" match funds from potential investors to various industries.
"The platform would facilitate efficient mobilisation of private sector, both from individuals and corporations, to finance targeted industries and ventures that are in need of funding," she said.
Zeti also said the platform might also help an already rapidly-growing international connectivity for Islamic banking and finance.