Malaysia advances Islamic finance and bank resolution frameworks

Bank Negara Malaysia (BNM) is advocating for a broader role for Islamic finance to support emerging, capital-intensive industries. Governor Abdul Rasheed Ghaffour stated that specialized financing is necessary for sectors such as advanced manufacturing, technology-intensive activities, and the energy transition, which often require longer investment horizons and higher upfront capital.

Islamic banking's share of total financing rose to 48% in 2025, up from 25% in 2015. These developments will be integrated into BNM’s upcoming Financial Sector Blueprint 2027–2030.

Separately, Perbadanan Insurans Deposit Malaysia (PIDM) has introduced new measures to strengthen bank resolution readiness. These include the Resolvability Assessment Framework (RAF), which sets clearer expectations for banks, and a cooperation agreement with Payments Network Malaysia Sdn Bhd (PayNet) to ensure continued access to critical payment infrastructure during resolution processes.

PIDM also launched Data Pulse, an initiative providing insights into household financial wellbeing, and RAFi, an AI-enabled tool to assist member banks in navigating resolvability requirements.