Hot on the heels of launching a new range of Islamic financial products last month, SME digital financier Funding Societies Malaysia has now introduced a new offering of Shariah compliant investment notes.
Known as Guaranteed Islamic Investment Note (GN-i), the digital offering provides investors with an opportunity to diversify their portfolios through short-term Shariah compliant investment notes for a minimum of RM100 (US$21.54) per note, with guaranteed gross returns of up to 8% a year.
The GN-i adopts a commodity Murabahah structure combined with a Kafalah (guarantee contract). In the event of an SME default, the guarantor assumes the payment obligations and compensates the investors accordingly.
The launch of GN-I follows Funding Societies releasing a range of Islamic products in May, which included micro financing and business-term financing products. The consecutive launches can be seen as the digital lender’s aggressive move into the Islamic finance space as it attempts to appeal to a larger market segment in Muslim-majority Malaysia. It intends to have at least half of its disbursement to be Shariah compliant by 2025.
According to Securities Commission, RM368.13 million (US$79.31 million) out of RM1.7 billion (US$366.25 million) in 2022 was raised via Shariah compliant investments on P2P or SME digital financing and equity crowdfunding platforms.
There are at least 58 fintech start-ups providing Shariah compliant services and products in Malaysia, according to the IFN Islamic Fintech Landscape as at the 21st June 2023.
Founded in 2015, Funding Societies has been operating in Malaysia since 2016 and offers a range of short-term financing solutions; it entered the payments and collections business in 2017. As at the end of 2022, the group (also present in Singapore and Indonesia) disbursed US$3 billion in financing to almost 100,000 SMEs through over five million transactions. In Malaysia, it disbursed RM2 billion (US$450.81 million) in financing since its inception. Overall platform cohort default rate stood at under 2%.