Malaysia Pushes Islamic Finance Innovation to Deliver Greater Economic and Social Benefits

Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour has called for purpose-driven innovation to strengthen Islamic finance and deliver greater economic and social benefits.

He said the industry has evolved beyond traditional banking into a wider financial ecosystem supporting households, entrepreneurs and businesses seeking to expand into international markets. Islamic finance now accounts for 48 per cent of Malaysia’s total financial assets, with its share expected to exceed 50 per cent in the coming years.

Islamic Finance Expands Support for SMEs and Underserved Communities

Abdul Rasheed said Islamic banks’ business financing grew 9.7 per cent, while microfinancing for micro, small and medium enterprises increased 13.3 per cent. The industry also contributed RM160 billion in sukuk issuance in 2025 to finance activities in the real economy. These figures reflect the sector’s growing role in supporting businesses, investment and economic development.

He highlighted the potential of zakat, waqf and commercial financing to help lower-income entrepreneurs build sustainable livelihoods instead of depending indefinitely on financial assistance.

The iTEKAD programme, introduced during the Covid-19 pandemic, has expanded from 57 participants in 2020 to approximately 16,000. Participating entrepreneurs recorded a 92 per cent increase in monthly sales and created more than 2,400 jobs. BNM plans to encourage further digitalisation, sustainable financing and innovation that broadens access to financial services.

BNM says purpose-driven innovation can help Islamic finance generate jobs, expand business opportunities and deliver lasting social benefits.

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