As a leading Islamic financial institution in Malaysia, Bank Islam plays a significant role in supporting the growth and sustainability of Small and Medium Enterprises (SMEs) and corporate customers through Shariah-compliant financing solutions. These services are essential to business continuity, economic stability, employment generation, and supply chain resilience.
In line with the 2025 BNM Discussion Paper on Operational Resilience, critical business services (CBS) are those whose disruption would have an intolerable impact on customers, the financial system, or the institution’s safety and soundness. SME and Corporate Financing Services represent a high-impact service category due to their importance in credit intermediation, liquidity provision, and business operations funding.
A structured breakdown into detailed processes (Sub-CBS) enables Bank Islam to identify operational dependencies, assess vulnerabilities, define impact tolerances, and strengthen end-to-end resilience across the financing lifecycle.
This chapter aims to provide a comprehensive decomposition of CBS-4 SME and Corporate Financing Services into its detailed business processes (Sub-CBS), consistent with the expectations outlined in the 2025 BNM Discussion Paper on Operational Resilience.
By understanding these sub-processes, readers will be able to identify critical operational touchpoints, interdependencies, and potential points of failure across the financing value chain. The objective is to establish a clear foundation for subsequent resilience mapping, scenario testing, and impact tolerance setting.
|
Sub-CBS Code |
Name of Sub-CBS |
Description of Sub-CBS |
|
4.1 |
Customer Onboarding and Financing Application Initiation |
End-to-end process of onboarding SME and corporate customers, including KYC, AML/CFT screening, Shariah screening, documentation collection, and submission of financing applications through branch, relationship managers, or digital channels. |
|
4.2 |
Credit Assessment and Risk Evaluation |
Evaluation of customer creditworthiness, including financial analysis, cash flow assessment, collateral valuation, sector risk analysis, Shariah compliance review, and internal risk rating assignment. |
|
4.3 |
Credit Approval and Governance |
Formal approval process involving delegated authorities, credit committees, Shariah endorsement (where applicable), and compliance verification in accordance with internal policies and regulatory requirements. |
|
4.4 |
Financing, Structuring, and Documentation |
Structuring of Shariah-compliant financing facilities (e.g., Murabahah, Tawarruq, Ijarah, Istisna’, Musharakah), preparation of legal documentation, security documentation, and execution readiness. |
|
4.5 |
Facility Setup and Limit Activation |
System setup of approved financing limits in core banking systems, collateral registration, disbursement conditions verification, and activation of facilities for utilisation. |
|
4.6 |
Financing Disbursement and Payment Execution |
Processing and release of financing funds to customers or third parties (e.g., suppliers), including trade financing instruments, progressive disbursement, and compliance checks prior to payment. |
|
4.7 |
Trade and Working Capital Financing Processing |
Operational handling of trade-related products such as Letters of Credit, Bank Guarantees, Trust Receipts, Invoice Financing, and other working capital facilities, including document examination and settlement. |
|
4.8 |
Financing Account Maintenance and Servicing |
Ongoing management of financing accounts, including profit calculation, billing, payment processing, rescheduling, restructuring, limit review, covenant monitoring, and customer service support. |
|
4.9 |
Collateral and Security Management |
Management of pledged securities, including valuation updates, insurance monitoring, charge registration, safe custody, and release upon settlement. |
|
4.10 |
Monitoring, Early Warning, and Portfolio Management |
Continuous monitoring of account performance, covenant compliance, arrears tracking, early warning indicators, impairment assessment, and portfolio risk analytics. |
|
4.11 |
Recovery, Remedial, and Legal Management |
Management of non-performing financing, including restructuring, legal recovery, foreclosure, collateral realisation, litigation, and impairment provisioning processes. |
|
4.12 |
Regulatory Reporting and Shariah Governance Oversight |
Preparation and submission of regulatory reports to Bank Negara Malaysia, internal risk reporting, capital adequacy inputs, and Shariah governance oversight relating to financing activities. |
The decomposition of CBS-4 SME and Corporate Financing Services into its detailed Sub-CBS processes provides a structured foundation for operational resilience implementation at Bank Islam. Each sub-process represents a critical operational segment whose disruption could significantly impact customers, counterparties, and the broader financial ecosystem.
By clearly defining these processes, Bank Islam is better positioned to:
This structured approach ensures that SME and Corporate Financing Services remain resilient, responsive, and aligned with regulatory expectations, while continuing to support Malaysia’s economic development in a sustainable and Shariah-compliant manner.
|
Implementing Operational Resilience for Bank Islam: Aligning with BNM and Global Best Practices |
|||||
| eBook 3: Starting Your OR Implementation |
|||||
| CBS-4 SME and Corporate Financing Services | |||||
| CBS-4 DP | CBS-4 MD | CBS-4 MPR | CBS-4 ITo | CBS-4 SuPS | CBS-4 ST |
To learn more about the course and schedule, click the buttons below for the OR-300 Operational Resilience Implementer course and the OR-5000 Operational Resilience Expert Implementer course.
|
If you have any questions, click to contact us. |
||
|
|