CIMB Niaga plans new Syariah product

PT Bank CIMB Niaga Tbk (CIMB Niaga), 97 per cent owned by the CIMB Group, plans to roll out a new Syariah product, Commodity
Murabahah deposit, possibly by end of this year, said CIMB Group's Head of Group Islamic Banking Division, Badlisyah Abdul Ghani.

Badlisyah, who is also Chief Executive Officer of CIMB Islamic Bank Bhd, said the product, to be offered under CIMB Niaga Syariah, the Group's Islamic banking sub-brand in Indonesia, is awaiting approvals from relevant regulators in Indonesia.

"Hopefully, we can secure approvals for the product as early as possible," he said in an interview with Bernama recently.

"Approvals processes are different in different jurisdictions and some can even be longer than three months. No matter what the timing, we are a bank and we are in the business for the long haul. We will work closely with regulators to obtain the desired approvals so as to be able to bring the right product to the market on a timely basis."


He said the Commodity Murabahah deposit was one of the more major products among several others that the bank currently had in the pipeline in Indonesia.

"The product is of high priority to us because it is a very strong and good product for customers whether they are institutional and retail depositors as it is the only Islamic deposit product that will provide depositors with both certainties of getting their desired returns and getting back their principal deposit."

Badlisyah said in the first stage, the product would be made available to the institutional depositors predominantly in the inter-bank market and subsequently to the broader retail depositors.

"It would be good if the product can be offered to the general public subject to relevant regulatory approvals sooner rather than later. Commodity Murabahah has proven to be popular with retail depositors in Malaysia and has made Islamic banks more competitive even against conventional banks. We hope to see the same competitive environment in Indonesia between Islamic and conventional banks as it will be good for consumers as a whole," Badlisyah said.

"It is still very early in terms of the industry's regulatory framework in Indonesia and it takes a few months to get products out, which is still far better than most other countries. We expect it will be even better over time here in Indonesia as we have seen in Malaysia," he added.

Since CIMB Niaga Syariah was rationalised within CIMB group's global Islamic banking franchise, CIMB Islamic, about two years ago, the bank has developed a few new products in Indonesia including Islamic credit cards, Ar-Rahnu (ie. pawn broking), trade financing, corporate financing, sukuk, deposits, and some others.

Badlisyah said CIMB Niaga may need another year or two to have all the relevant products and infrastructure in place in order for the bank to move aggressively in the market to provide Indonesian consumers with a full suite of Islamic banking offerings. The bank currently has about 600 branches that are ready to sell Islamic banking products across Indonesia.

"We have put up a strong platform for Islamic banking under CIMB Niaga Syariah in the last two years. In the second phase, we plan to ensure that the people manning the platform are fully equipped with the relevant knowledge to sell Islamic products."

CIMB Niaga Syariah is the fourth largest Islamic financial institution in terms of assets in Indonesia. There are 34 Islamic players in the market comprising stand-alone Islamic banks and the Islamic windows. They are both governed by the same regulation and Syariah governance framework.

Badlisyah said CIMB Niaga Syariah currently contributed less than five per cent to CIMB Niaga and less than one per cent to the CIMB Islamic franchise.

"We want to grow CIMB Niaga Syariah business to a level where it is contributing significantly to our bottomline. The plan is to deepen the products that we have in Indonesia subject to the readiness of the relevant authorities in approving those products as well improving our product delivery," he said.

"We have a list of close to 200 products that we can bring from our Islamic operations elsewhere into the Indonesian market," he added. -- Bernama