It is a great pleasure to be here today, marking another milestone for Malaysia’s Islamic banking sector. I extend my sincerest gratitude to the organisers for inviting me to witness this remarkable achievement, which symbolises both progress and our shared commitment to advancing sustainable Islamic finance.

Background: Acknowledging a Landmark Achievement

Today, we celebrate Malaysia’s first-ever Sustainable SBBA Transaction, brought to life through the collaboration of RHB Islamic Bank, HSBC Amanah and Standard Chartered Saadiq.

This achievement reinforces Malaysia’s pioneering role in global Islamic finance, showcasing our ability to embrace innovation while aligning financial practices with sustainability goals. By integrating ESG principles into Shariah-compliant structure, this transaction sets a benchmark for inclusivity, resilience and sustainability in the financial ecosystem.

Integration of Sustainability Features

A particularly exciting feature that marks today’s signing ceremony is the introduction of the Sustainable SBBA component. This innovative development incorporates the Sustainable Use of Proceeds Annex, which embeds a scalable mechanism for sustainability across all eligible SBBA transactions, unlike previous standalone transactions that required individual provisions. This enhanced SBBA streamlines transaction processes, accelerates ESG approvals and encourages broader participation and adoption of ESG-aligned and Shariah-compliant instruments in Islamic interbank markets.

This design represents a significant leap forward, broadening financing avenues from sukuk and bonds to SBBA transactions. In doing so, it expands mobilisation of fund sources that support sustainability and enhances market liquidity, setting a new benchmark for sustainable finance in Malaysia.

The Enhanced SBBA Structure: Shariah-Compliant Innovation

The enhanced SBBA structure formalised today also addresses longstanding industry challenges, strengthening the reliability and operational efficiency of SBBA transactions through the integration of advanced features such as margining, asset substitution mechanisms and refined application of Shariah principles. Indeed, this now positions SBBA transactions to be on par with the globally recognised GMRA agreement in conventional banking.

Alignment with BNM’s Commitment

Endorsed by Bank Negara Malaysia’s Shariah Advisory Council in April 2024 and supported by external legal opinions under Malaysia’s Netting Act, the enhanced SBBA model is both legally sound and scalable, and fully Shariah-compliant. Its successful implementation is a testament to industry collaboration and sets a new benchmark for future Islamic finance transactions.

The enhanced SBBA structure aligns seamlessly with Bank Negara Malaysia’s Islamic Collateralised Funding Policy Document (ICF PD) which was released in June 2024. The policy document paves the way for collateralised funding structures while upholding Shariah principles, financial stability and liquidity management. This alignment demonstrates BNM’s dedication to fostering innovation, transparency and fairness in the financial market.

Bank Negara Malaysia is proud to be part of this historic milestone, which underscores our dedication to promoting innovative solutions that enhance transparency and fairness in the financial market. The enhanced SBBA model showcases Malaysia’s leadership in advancing Islamic finance and the development of Islamic financial markets. Let us congratulate RHB Islamic, HSBC Amanah and Standard Chartered Saadiq for their collaborative efforts in spearheading this groundbreaking transaction. This reinforces the importance of innovation and teamwork in driving the Islamic finance industry forward.

Call to Action and Future Aspirations

As we celebrate this landmark achievement, I urge all Islamic financial institutions to adopt the enhanced SBBA model as a pivotal step toward addressing liquidity challenges and advancing Malaysia’s leadership in Islamic finance innovation and sustainability. The integration of ESG principles under a standardised framework empowers institutions to strengthen their resilience, enhance operational efficiency and mobilise impactful green and social financing initiatives.

The ICF PD has already contributed to the growth in activity of Islamic repo transactions within the Islamic Interbank Money Market (IIMM). Since its adoption, interbank transaction volumes^[1] increased from RM12.6 billion in 2023 to RM42.6 billion in 2024, with RM34.8 billion recorded in the first half of 2025 alone. With the adoption of the enhanced SBBA structure, there is strong optimism that Islamic repo volumes and transactions will accelerate further, driving greater market adoption and buy-in while reinforcing the robustness and sustained growth of the Islamic money market ecosystem.

These achievements reflect broader trends in Islamic finance, with growing demand for diverse products and instruments that now go beyond banking and takaful to include retirement and protection solutions. It is imperative for us to continue innovating to keep pace with these trends and to sustain our leadership. Malaysia’s leadership in this space was reaffirmed by the recently released Islamic Finance Development Indicator (IFDI)^[2], where we retained the top global position. This recognition highlights our achievement in expanding the market, and the pivotal role that we can play in advancing and shaping the future of Islamic finance.

Let us seize this opportunity to build on these successes, transforming this achievement into a foundation for sustainable growth, innovation and Shariah-compliant excellence. By working together, we can set new benchmarks for the Islamic finance industry and ensure Malaysia continues to lead globally in sustainable Islamic finance practices.

Conclusion

The Prophet (pbuh) has mentioned in a hadith:

'The world is sweet and green (alluring) and verily Allah is going to install you as vicegerent in it in order to see how you act....' (Sahih Muslim no. 2742)

This reminder aligns closely with today’s achievement. As caretakers of the world, we are responsible for ensuring our financial practices promote sustainability, fairness and Shariah principles. The integration of ESG principles into the enhanced SBBA model reflects this commitment, demonstrating our dedication to ethical and impactful financial solutions.

Before I conclude, I would like to express my heartfelt gratitude to the organisers and participants for their unwavering dedication to advancing Islamic finance. This milestone reflects not only a technical achievement but also a broader commitment to embedding sustainability and value-based intermediation at the core of Islamic finance. It highlights Malaysia's leadership in fostering innovation, fairness and progress within the financial sector, while strengthening our collective efforts to build a system that is resilient, efficient, purposeful and inclusive.

Congratulations to all who have made this possible. And with that, it gives me great pleasure to officially launch the enhanced SBBA Agreement and Malaysia’s first Sustainable SBBA Transaction.

[1] Source: Bank Negara Malaysia

[2] Source: ICD-LSEG Islamic Finance Development Report 2024