KUALA LUMPUR: OCBC Al-Amin Bank Bhd (OCBC Al-Amin), the Islamic banking unit of OCBC Bank (Malaysia) Bhd (OCBC), will offer the country's first Islamic green foreign currency and bank-to-bank term financing facility.
The banking group has extended a pioneering US$175 million Islamic green term financing facility to RHB Islamic Bank Berhad (RHB Islamic).
Using the facility, RHB Islamic will offer comprehensive environmental, social, and governance (ESG) financing solutions to its clientele.
The term financing extended to RHB Islamic is a historic facility in both the country and the bank's journey toward achieving the ideals of the Islamic banking industry's sustainability agenda, according to Tuan Syed Abdull Aziz Syed Kechik, chief executive officer of OCBC Al-Amin.
"We are pleased to collaborate with RHB Islamic on this significant Shariah-compliant financial solution for the country and will continue to look to strengthen our green efforts, working closely with our industry peers to achieve net-zero decarbonisation in Malaysia by 2050," he said in a statement.
"Islamic green term financing" pertains to financing that adheres to Shariah requirements and promotes bank-to-bank green financing that utilises the use-of-proceeds method in applying financing proceeds directly to targeted economic segments in an environmentally and socially responsible manner.
The term financing is embedded with an Islamic cross-currency swap arrangement, which provides a Shariah-compliant hedging mechanism that protects against currency market fluctuations.
RHB Islamic managing director Datuk Adissadikin Ali said that the Shariah-compliant financing facility aligns with the banking group's commitment to upholding value-based intermediation (VBI) principles.
It also supports the bank's sustainability strategy and roadmap, particularly its aspiration to develop a path to net zero by 2050, he said.
"Through this innovative financial solution, we aim to serve our clients and business partners' needs by empowering them with more green financing options that offer competitive rates,' he said.
Earlier this year, Singapore-based OCBC Group and RHB Banking Group entered into a partnership on two sustainability-linked solutions, featuring a two-year S$150 million sustainability-linked loan and cross-currency swap between OCBC Group and RHB Bank Malaysia and a S$100 million sustainability-linked loan to RHB Bank Singapore.