Following the launch of its comprehensive Islamic financing solutions recently, Funding Societies, the Singapore-based unified small and medium sized enterprise (SME) digital finance platform, has introduced its Guaranteed Islamic Investment Note (GN-i) in Malaysia.

This new offering provides investors with an opportunity to diversify their portfolios through short-term, Shariah-compliant investment notes, Funding Societies said in a statement on Wednesday.

Cited the Securities Commission’s 2022 Annual Report, it said that MYR 368.13 million ($79.19 million) out of MYR 1.7 billion ($370 million) was raised via Shariah-compliant investments on peer-to-peer (P2P) or SME digital financing and equity crowdfunding (ECF) platforms.

With the growth potential in this sector, it said fintech players have been identified as key enablers for innovative solutions in the halal economy and Islamic social finance.

By introducing Shariah-compliant options for both SMEs and investors, Funding Societies said it aims to contribute to the development of the Islamic capital market ecosystem as envisioned by the Securities Commission.

“We are proud to introduce our first-ever Shariah-compliant guaranteed investment product on the heels of our comprehensive SME Islamic financing solutions launch in May,

“Investors now have the opportunity to diversify their portfolios with Shariah-compliant guaranteed investments which, in turn, helps close the MYR 90 billion ($19.36 billion) SME financing gap by supporting Malaysian SMEs to grow and expand their business,” said Chai Kien Poon, Country Head, Funding Societies Malaysia.

As an SME digital finance platform, Funding Societies provides financing to micro, small, and medium enterprises (MSMEs) through investment notes funded by retail, high-net-worth, and institutional investors.

Payments from MSMEs, including both principal and returns, are collected by the platform and distributed to investors according to the agreed schedule, which can extend up to 24 months.

Funding Societies has disbursed over MYR 2 billion ($430 million) in financing in Malaysia since its inception in 2017, offering MSMEs a hassle-free capital solution.

With no collateral requirement and quick disbursement turnaround time, MSMEs, including aspiring young entrepreneurs and those from disadvantaged backgrounds, can obtain the necessary funding to expand their businesses and increase their income.

“In addition to providing accessible financing to creditworthy underserved SMEs, we have set a low minimum investment amount for our investors,

“Starting from just MYR 100 ($21.51) per note, investors can enjoy guaranteed gross returns of up to 8 percent per annum,” said Chai.

The GN-i follows commodity murabahah principles through a Tawarruq arrangement, combined with a kafalah (guarantee) contract.

In the event of SME default, the guaranteeing entity assumes the payment obligations and compensates the investors accordingly.

Funding Societies | Modalku is the largest unified SME digital finance platform in Southeast Asia.

It is registered with the Securities Commission Malaysia (SC), as well as licensed in Singapore, Indonesia, and Thailand, and operates in Vietnam.

The firm is backed by SoftBank Vision Fund 2, SoftBank Ventures Asia, Sequoia Capital India, Alpha JWC Ventures, SMBC Bank, Samsung Ventures, BRI Ventures, Endeavor, SGInnovate, Qualgro, and Golden Gate Ventures amongst others.

The FinTech company provides business financing to SMEs, which are funded by individual and institutional investors.

In eight years, Funding Societies has helped finance over 5.1 million business deals close to MYR 14 billion ($3.01 billion) in funding.

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