BNM To Adopt MYOR-i As Mandatory Islamic Reference Rate From July 2027

Samuel Chua

14th October 2025 - 3 min read

Bank Negara Malaysia (BNM) will make the Malaysian Islamic Overnight Rate (MYOR-i) the official reference rate for all Islamic financial products starting 1 July 2027. This marks an important change in how Islamic finance will be priced and managed in Malaysia.

Governor Datuk Seri Abdul Rasheed Ghaffour said MYOR-i, the world’s first transaction-based Islamic benchmark rate, will make Islamic finance more transparent, consistent, and aligned with shariah principles.

He also said the move is a “structural transformation” for the industry, not just a technical change.

Strengthening Malaysia’s Islamic Finance System

Abdul Rasheed said introducing MYOR-i is part of five main steps Malaysia is taking to strengthen its Islamic finance system. These include encouraging risk-sharing, promoting inclusive growth, expanding global links, and developing talent.

He said BNM wants more use of risk-sharing models such as musharakah (joint partnership financing) and mudarabah (profit-sharing investment). These models share profit and loss between parties instead of relying only on debt.

He also highlighted the new i-Cita programme, launched in September 2025 with a RM100 million government fund, to support projects that use shariah-compliant contracts and create real economic and social benefits.

To support this, BNM is reviewing its policies on shariah contracts and investment accounts to create a more flexible and supportive framework for investment-based financing.

The second initiative focuses on linking Islamic social finance with the mainstream financial system to make growth more inclusive.

Abdul Rasheed pointed to the iTekad programme as an example. It combines public and private funding to help communities increase their income and job opportunities.

He said the programme’s new phase includes financial protection for participants, backed by a RM5 million government matching grant for takaful contributions. This shows how banks, takaful operators, and development partners can work together to support community development.

Expanding Into Global Growth Areas

Malaysia also aims to position Islamic finance in two fast-growing global areas: the halal economy and sustainable finance.

Through the Malaysia International Islamic Financial Centre (MIFC) Leadership Council, the country has built strong foundations for international cooperation. Abdul Rasheed said the next step is to strengthen industry leadership through the new MIFC Business Network (MBN).

Nine founding members from banking, takaful, capital markets, and financial services have joined MBN, with more expected soon.

Building Talent And Innovation For The Future

The fifth area focuses on growing local talent and supporting innovation in Islamic finance.

Abdul Rasheed said INCEIF University is now focusing on research and innovation, integrating Maqasid Shariah principles, which are the core objectives of Islamic law that emphasise fairness, justice, and social benefit, into economic and policy planning.

Meanwhile, the Islamic Banking and Finance Institute Malaysia (IBFIM) is updating its Associate Qualification in Islamic Finance (AQIF) programme for ASEAN countries such as Brunei, Indonesia, the Philippines, and Singapore.

He said Malaysia must continue to invest in talent so the next generation can design and deliver the future of Islamic finance.

Leading With Purpose In Islamic Finance

Abdul Rasheed also said the global Islamic finance industry could grow to more than US$9.7 trillion (RM41 trillion) by 2029. However, he said Malaysia’s progress should be measured not just by size, but by leadership, innovation, and meaningful impact.

The move to MYOR-i in 2027 will help ensure Islamic finance in Malaysia remains transparent, resilient, and guided by strong values.

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