suhaimi ali : keynote address - takaful rendezvous 2023 keynote address by mr suhaimi ali, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the takaful rendezvous 2023, kuala lumpur, 26 september 2023. * * * assalamu'alaikum and a very good morning to distinguished guests, ladies and gentlemen. we are a few months away from the 40 - year milestone when the malaysia's takaful act 1984 was enacted to provide legal foundation for takaful establishment in malaysia. over the years, the industry continues to grow in terms of offerings and quality of their participation in the financial system. the size of the takaful industry has expanded nearly three times to where it was a decade ago1. this growth is propelled by the growing public awareness of takaful products and a supportive islamic finance ecosystem. notwithstanding these strides, the takaful industry is also facing critical challenges to attain scale, expertise and to have the right business model. these challenges have become roadblocks for the industry to be on a better footing to resolve the social protection needs in malaysia and facilitate an orderly transition to a greener economy. globally, the takaful industry has also demonstrated significant progress and developments. today, there are more than 330 takaful operators in 47 countries2 worldwide. global takaful assets size stands at an estimation of usd73 billion3, almost doubled from where it was in 2015. nonetheless, navigating the path to attain greater market maturity is still a long journey with current takaful share stands only at a modest 1 % relative to the global insurance market. last week at the 18th kuala lumpur islamic finance forum ( kliff ), i spoke about four key game - changers for islamic finance, which is also relevant to the context of takaful industry today. learning from the successes of the islamic golden age, we must continue to focus on a number of key attributes to propel the industry forward : 1. first, is to have a strong shariah compass that guides and drives the takaful activities. to yield meaningful impact, businesses, practitioners and industry leaders of today must realign their practices to stay true to the spirit of islamic finance that places a strong emphasis on the benefit and welfare to society, beyond just profit - maximisation as a primary objective. 2. second, is the need to have a culture of innovation. great islamic civilisation

be distressed - assets managers. 6 / 7 bis central bankers'speeches moreover, one of the main channels through which high npls can have a feedback effect on the macroeconomic environment is through their impact on bank lending capacity to the economy. npls can weigh negatively on the supply of credit by locking in bank capital and funding in the financing of non - productive assets. in addition, high npls distort credit allocation, as non - viable firms are kept artificially alive in an attempt by banks to avoid or delay loss recognition on these loans at the expense of firms that are competitive and have better growth prospects. this brings us to the necessity of restoring the intermediation role of banks in an economy that is suffering from a significant savings – desirable investment gap as well as continuous deleveraging. it is well documented that a credit - less recovery is weaker, mainly because the lack of bank credit affects investment. yet such a recovery can hardly be tolerated given other drags on potential output growth, such as the high public debt ratio and the negative demographic trends. the improvement in the liquidity position of banks on the back of gradually increasing deposits, enhanced access to the secured interbank market and a handful of covered bond and securitization transactions is encouraging. crucially, the elimination of the recourse to ela will allow banks to design and implement credible medium - term credit expansion plans. against this backdrop, financing of non - financial corporates for working capital or investment projects would be given priority. that said it is also important to restore the access of the household sector to credit after a protracted period of almost a complete standstill. that brings us to the challenge for bank managers to come up with a sustainable business model for greek banks. in the midst of the crisis, greek banks were obliged to reduce substantially their international operations as well as non - core domestic activities, as part of their restructuring plans agreed with dg competition in the context of state aid support approval. as a result, domestic traditional banking activities contribute the bulk of their operating profitability and will continue to do so in the foreseeable future. undoubtedly, banks face a challenging, to say the least, operating environment in greece, while some of their best customers, i. e. large extrovert non - financial corporates, can tap the international bond markets directly at relatively favourable terms. against this backdrop, a digitalization drive coupled with other cost containment efforts can further improve banks ’ efficiency, which