Malaysia’s Islamic Finance Tops US$800 Billion as BNM Pushes Tokenised Sukuk Past Pilots
Malaysia’s Islamic finance industry has grown past US$800 billion, according to new estimates from Fitch Ratings, and Bank Negara Malaysia (BNM), the central bank, now wants the sector to stop testing digital tools and start using them every day. The message is that tokenised sukuk, Islamic bonds recorded on a digital ledger, must move from one-off pilots to repeat deals.
Fitch also points to a government plan, announced in Budget 2027, for a tokenised retail savings sukuk. That could bring the technology from big institutions to ordinary savers for the first time.
Key facts
- Fitch estimates Malaysia’s Islamic finance industry was worth more than US$800 billion at the end of the third quarter of 2026, equal to over 150% of the country’s gross domestic product (GDP).
- Sukuk make up about 47% of the industry and Islamic banking assets about 42%. Malaysia holds 33% of all sukuk outstanding worldwide, the largest share of any country.
- Budget 2027 includes a planned tokenised retail savings sukuk from the government. Its size, timing and minimum investment have not been announced.
- BNM Assistant Governor Mohamad Ali Iqbal Abdul Khalid has urged the industry to scale up innovations such as tokenised sukuk through wider adoption and repeat transactions, not single pilot projects.
- MYOR-i, Malaysia’s new Islamic benchmark rate, becomes mandatory on 1 July 2027.
From pilots to plumbing
Tokenisation means creating a digital record of an asset, such as a bond, on a shared ledger. The record can be transferred and settled quickly, and rules can be written into it. In Islamic finance this matters because a sukuk must stay linked to real assets and follow Shariah principles, and a digital ledger can make that link easier to track.
Malaysia has already done several first steps. Khazanah Nasional, the state investment fund, worked with the Securities Commission Malaysia (SC) on a RM100 million, one-year tokenised sukuk, with CIMB and Maybank among the participating banks. On 20 October, BNM launched SSDS+, an upgraded version of its securities depository that can issue, record and safeguard tokenised bonds and sukuk. The industry has also run a pilot that settled a tokenised sukuk using tokenised bank deposits.
Fitch said the Khazanah deal and SSDS+ marked further progress for tokenised Islamic capital markets. BNM’s point is that a handful of showcase deals is not enough. It wants banks and issuers to keep using these rails until they become normal market practice.
What it means for Malaysians
- Savers: a tokenised retail savings sukuk could let individuals buy small amounts of government sukuk through a digital platform. Details are still unknown, so it is too early to say how it will compare with existing savings sukuk or fixed deposits.
- Borrowers: MYOR-i will replace the older reference rates used to price many Islamic loans and financing. Islamic financing already makes up about 44% of all banking system financing in Malaysia, so the switch will affect many home and business financing contracts. Banks will need to explain the change clearly to customers.
- Banks and fintechs: BNM wants financial institutions to prepare for wider use of MYOR-i across financing, sukuk and derivatives. Tokenised settlement also opens room for technology firms that build ledgers, custody and payment links between tokenised assets and tokenised money.
- The ringgit market: BNM also wants more international investors in Malaysian sukuk. It is pushing for more transparency, globally recognised sukuk structures and a more liquid secondary market, where investors trade sukuk after they are issued.
Fitch expects the industry to keep growing, helped by a deep local market and policy support. It also warned that growth could be held back by volatile global markets, lower government sukuk issuance and swings in currencies, interest rates and commodity prices.
What to watch
- Details of the tokenised retail savings sukuk: who issues it, the minimum investment, and which apps or banks will sell it.
- Whether more issuers use SSDS+ for repeat tokenised sukuk deals, not just one-off pilots.
- How banks move customers from old reference rates to MYOR-i ahead of the 1 July 2027 deadline.
Related on FinDeskAsia: Bank Negara Launches SSDS+, Putting Malaysia’s Bonds and Sukuk on a Digital Ledger and Bank Negara Joins Singapore-Led BLOOM to Shape Cross-Border Digital Money Rules.
Sources: The Star/Bernama (October 2026), The Star (October 2026), Fintech News Malaysia (October 2026), The Star (October 2026), IDNFinancials (2026), Bernama (October 2025).
