Islamic Banks Have Potential To Extend Role As Investment Intermediary: Zeti

KUALA LUMPUR, Sept 3 (Bernama) -- Islamic banks have the potential to extend their role to include that of an investment intermediary, says Bank Negara (Central Bank) Malaysia Governor Dr Zeti Akhtar Aziz. She said this would require the diversification of the 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 in her speech while officiating the Global Islamic Finance Forum (GIFF) 2014 here Tuesday. Zeti cited the growth of the industry which has extended beyond the numbers, as well as sustained its growth momentum, while having an immense potential role as a transformative agent in the economy, particularly in serving the requirements of the real global Islamic financial market place. Meanwhile, she told reporters on the sidelines of the forum that 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 said. 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 licence 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. -- BERNAMA