Mega Islamic Bank's Creation Should Meet Objective, Says Zeti

KUALA LUMPUR - Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz says the creation of a mega Islamic bank should serve the objective of supporting international trade and cross-border investment activities.

"Malaysia needs a mega Islamic bank to internationalise Islamic Finance. But, we do not want a mega bank for the sake of having one.

"That is why we would like (to have) a mega bank which has the scale and ability to do that," she told reporters after officiating the Global Islamic Finance Forum (GIFF) 2014 here Tuesday.

Zeti said large institutions, through the mega bank, would expand the national economy via internationalisation, as well as, enhance financial and economic connectivity with other countries.

She was commenting on the license for the proposed mega Islamic bank by CIMB Group, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB).

On July 10, CIMB, RHBCap and MBSB received the central bank's approval to commence discussions on the structuring of a mega Islamic bank.

Earlier in her speech, Zeti said Islamic banks had the potential to extend their role to include that of investment intermediary.

"This would require the diversification of banking business to expand beyond credit intermediation to investment intermediation, in which the alternative modes of risk sharing contracts can be applied.

"In performing investment intermediation, Islamic banking institutions not only strengthen further the linkage of finance and real economic activity, but also contribute towards more inclusive and more balanced growth," she said.

She cited the growth of the industry which has extended beyond the numbers, as well as, sustained its growth momentum whereas Islamic finance has had an immense potential role as a transformative agent in the economy, particularly in serving the requirements of the real global Islamic financial market place.