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Thursday, May 30, 2024

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RHB Banking Group targets to finance 1,000 green vehicles through Islamic banking arm in 2023

RHB Banking Group (RHB) is targeting to finance 1,000 green vehicles by the end of 2023 fully through its Islamic banking arm, RHB Islamic Bank, Jeffrey Ng, the managing director of group community banking at RHB Banking Group, told ISFI.

As part of the group’s sustainable financing program offered through its green financing facility, the funding of the green vehicles will amount to a total financing of RM200 million (US$45.85 million).

“The RHB green financing facility is fully offered by RHB Islamic Bank. The facility is based on the Vehicle Financing-i (Variable Rate) product under the Shariah concept of Al- Ijarah Thumma Al-Bai,” Ng detailed.

Launched in late 2021, the group has, through its Islamic banking arm, disbursed RM100 million (US$22.93 million) in financing for green vehicles as at December 2022 under the green financing facility.

“We target to double this amount and disburse RM200 million this year,” Ng said in a statement.

The Green Financing Facility offers preferential rates for the financing of hybrid and plug-in hybrid and electronic vehicles.

Additionally, RHB also provides financing for residential solar panels for net energy metering as well as solar financing for SMEs that wish to transition to a low-carbon energy model.

RHB Islamic Bank has worked with Islamic authorities to install solar photovoltaic panels as part of the green mosque endowment fund initiative spearheaded by the Malaysian Ministry of Environment and Water.

In 2021, the Islamic bank collaborated with the Islamic affairs authority of the state of Perlis where the bank provided RM500,000 (US$114,630) in financing to a company mandated by the authority to install solar photovoltaic panels for up to 10 mosques across the state.

While the group’s green vehicle financing is offered via its Islamic banking arm, its SME-centered green construction facility has yet to be offered via its Islamic arm.

Underpinned by its sustainability framework launched in 2019, the group launched the RHB i-Global Sustainable Disruptors Fund in January 2021 under its asset management arm as part of its Islamic sustainable investment efforts. As at the beginning of 2022, RHB Islamic had RM545 million (US$124.95 million) in total outstanding investments in SRI-related securities.

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