As Malaysia prepares to award five digital banking licenses to a pool of 29 applications by the end of the first quarter, two organizations have come together to offer a Shariah-compliant micro-financing product.
Grab Financial Group Malaysia and Sedania As Salam Capital (SASC) have partnered to offer Grab Cash Financing-i to Grab’s drivers and delivery partners. The move is expected to enable them to have convenient and secure access to financing, so they can more easily address their immediate household and financial needs.
According to a media release, the financing option lowers the barriers to micro-financing which is typically inaccessible to those below a certain income level and lack a formal credit history. The solution is made possible through SASC’s GoHalal Financing Programme (GHP), which ensures the financing activities and operations are compliant with Shariah principles and practices.
The GoHalal Financing Programme has key Shariah compliance tools to enable Shariah financing and among key features are Shariah Advisory Services by Afsha Shariah Advisory and As-Sidq Digital Trading Platform using Digital Commodities for real-time transaction and processing. These key features are crucial elements to uphold the Shariah principles in micro-financing in the digital ecosystem which makes it a very unique proposition.
SASC is a fintech subsidiary of Sedania Innovator. Sedania Innovator inked a memorandum of understanding with FCA Capital in its bid for a digital Islamic bank license from Bank Negara Malaysia last year.
Meanwhile, Grab Financial Group Malaysia is under Grab. Grab also applied for a digital banking license in Malaysia through a joint venture with Singapore’s Singtel as part of a consortium of other Malaysian investors.
It remains to be seen how the new financing will impact both companies’ digital banking license applications. But for now, the move gives some indications that both companies are well prepared to offer financial services should they be awarded digital banking licenses.
Grab and Sedania see importance in micro-financing
According to Nisa Ismail, CEO of SASC, it is important that microfinancing is made available to all Malaysians and the products and platform are Shariah-compliant to ensure transparency in the financing terms and conditions. The GHP is developed with digital acceleration in mind to better position Shariah financing in today’s and tomorrow’s economy.
According to a survey which was conducted among Grab’s driver- and delivery-partners, 65% of them cited that a Shariah-compliant financing option was important to them. Their main financing needs included emergency and personal expenses, current loan settlement, and education for family members. When the program was introduced in December 2021 to a limited number of eligible partners, it received encouraging responses.
“Since introducing the program, we saw a take-up rate of 16% among eligible Grab drivers and delivery partners. Grab Cash Financing-i is just one of Grab Financial Group’s collaborative efforts with like-minded partners like Sedania to democratize financial services for everyday Malaysians,” said Sean Goh, Managing Director and Head of Grab Financial Group, Grab Malaysia.
Goh added that Grab’s ecosystem, technology, and data provide unique insights into their partners’ earnings and spending, and subsequently their risk scorecard and payment capabilities. The data can then customize products that cater to their financial needs.
This product launch is in line with Grab Financial Group’s mission to drive financing inclusion across Southeast Asia by offering simple, transparent, and flexible financial products.
Prior to this, Grab Financial Group has already been providing financial products to drivers and delivery partners in Malaysia under the banner of the GrabBenefits Programme. This includes access to affordable insurance, financial literacy courses, fuel subsidies, and advanced shopping vouchers are meant to help them defray their daily expenses and be more financially resilient.