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CBS-3 Retail Financing Services
Introduction
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Retail Financing Services represent one of the most critical business services delivered by Bank Islam Malaysia Berhad, as they directly affect customers’ access to home financing, personal financing, vehicle financing, and other Shariah-compliant credit facilities. Any prolonged disruption to this service may result in financial hardship for customers, reputational damage, regulatory scrutiny, and systemic confidence risks.
In line with the expectations articulated in the 2025 BNM Discussion Paper on Operational Resilience, financial institutions are required to clearly identify their Critical Business Services (CBS), map supporting processes and resources, and set impact tolerances for severe but plausible scenarios. Retail Financing Services (CBS-3) is therefore decomposed into detailed Sub-Critical Business Services (Sub-CBS) to enable granular resilience planning, dependency mapping, and scenario testing.
Purpose of the Chapter
This chapter aims to provide a structured breakdown of CBS-3 Retail Financing Services into clearly defined Sub-CBS processes. By understanding these detailed business processes, readers will be able to:
- Identify operational dependencies (people, process, technology, third parties).
- Assess vulnerability points across the retail financing lifecycle.
- Align impact tolerances with regulatory expectations.
- Strengthen recovery planning and continuity strategies.
- Prepare for severe but plausible disruption scenarios in accordance with Bank Negara Malaysia’s operational resilience principles.
The objective is to equip management, risk practitioners, and resilience teams with a practical foundation for implementing operational resilience in Retail Financing Services.
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Table P1: Detailed Processes for CBS-3
|
Sub-CBS Code |
Name of Sub-CBS |
Description of Sub-CBS |
|
3.1 |
Product Structuring & Shariah Governance |
Development, approval, and maintenance of Shariah-compliant retail financing products (e.g., home financing, personal financing, vehicle financing). Includes Shariah review, legal documentation standardisation, pricing framework, and compliance validation before market launch. |
|
3.2 |
Customer Application Intake & Submission |
Receipt of customer applications via branch, digital banking platform, sales agents, or intermediaries. Includes KYC onboarding, document collection, identity verification, and application data capture into core financing systems. |
|
3.3 |
Credit Assessment & Approval |
End-to-end credit evaluation, including income verification, CCRIS/CTOS checks, affordability assessment, risk grading, collateral valuation, and decisioning (automated or manual). Covers approval workflows and exception handling. |
|
3.4 |
Financing Documentation & Legal Perfection |
Preparation, execution, and safekeeping of financing agreements, security documents, and guarantees. Includes solicitor coordination, stamping, charge registration, and Shariah contract execution (e.g., Murabahah, Tawarruq). |
|
3.5 |
Disbursement Processing |
Controlled release of financing funds to customers, property developers, car dealers, or third parties upon fulfilment of pre-disbursement conditions. Includes dual controls, limit verification, and system posting into the core banking platform. |
|
3.6 |
Account Setup & Maintenance |
Creation of a financing account in the core banking system, configuration of profit rates, instalment schedules, and payment channels. Includes amendments, restructuring, repricing, and customer data updates. |
|
3.7 |
Instalment Collection & Payment Processing |
Processing of monthly instalments via auto-debit, salary deduction, online transfers, or over-the-counter payments. Includes reconciliation, posting, failed payment handling, and exception management. |
|
3.8 |
Profit Calculation & Statement Generation |
Calculation of profit accruals in accordance with Islamic financing structures. Includes periodic statement generation, customer notifications, and regulatory reporting accuracy. |
|
3.9 |
Arrears Monitoring & Early Intervention |
Continuous monitoring of delinquent accounts, reminder notices, customer engagement, rescheduling arrangements, and restructuring assessments. Includes trigger-based monitoring aligned to risk appetite. |
|
3.10 |
Recovery & Collection Management |
Management of non-performing financing accounts, including legal action, asset repossession, auction coordination, impairment assessment, and provisioning in accordance with accounting standards. |
|
3.11 |
Customer Service & Complaint Handling |
Handling retail financing-related enquiries, disputes, restructuring requests, settlement quotations, and complaints through branch, call centre, and digital channels. Includes escalation and regulatory reporting where required. |
|
3.12 |
Regulatory, Risk & Shariah Reporting |
Submission of financing-related reports to regulators (e.g., exposure limits, impaired financing ratios), internal risk monitoring, stress testing, and Shariah compliance oversight to ensure adherence to BNM and internal governance requirements. |
Alignment with BNM Operational Resilience Principles
Consistent with the 2025 BNM Discussion Paper, the above Sub-CBS breakdown supports:
- Identification of Important Business Services – Clear definition of end-to-end retail financing lifecycle.
- Mapping of Interconnections & Dependencies – Each Sub-CBS can be mapped to supporting systems (core banking, LOS, digital banking), people (credit officers, Shariah advisors), and third parties (law firms, valuation firms, credit bureaus).
- Setting Impact Tolerances – Enables measurable disruption thresholds (e.g., maximum tolerable downtime for disbursement processing).
- Scenario Testing – Facilitates testing of severe but plausible events such as system outages, cyber incidents, third-party failures, or liquidity stress.
- Continuous Improvement – Supports lessons-learned integration and resilience maturity enhancement.
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Retail Financing Services (CBS-3) is a mission-critical service for Bank Islam Malaysia Berhad due to its direct impact on customers’ financial stability and the bank’s profitability, reputation, and regulatory standing. By decomposing this service into detailed Sub-CBS components, the organisation can more effectively identify vulnerabilities, establish impact tolerances, and design targeted resilience strategies.
This structured breakdown forms the foundation for subsequent chapters on dependency mapping, severe but plausible scenarios, impact tolerance setting, and scenario testing. Ultimately, strengthening resilience across each Sub-CBS ensures that Bank Islam can continue delivering Shariah-compliant retail financing services even during significant operational disruptions, thereby safeguarding customers, stakeholders, and the broader financial system.
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