1.What is Guaranteed Islamic Investment Note?
Guaranteed Islamic Investment Note (GN-i) is the new product offered by Funding Societies. This is a product that is structured based on Commodity Murabahah (via Tawarruq arrangement).
2. How does it work?
Funding Societies will provide financing to Micro,Small & Medium Enterprises (MSMEs) via investment notes, which are funded by investors. MSMEs will make payments (principal & return) to investors as per agreed schedule.
In contrast to the normal structure, investment notes issued under the Guaranteed series will be guaranteed by an appointed entity (Guaranteeing Entity). In the event of non payment by the Issuer (≥ 15 days past due (DPD), the Guaranteeing Entity will repay the principal and returns due to Investors. The rights to claim of debt from the Issuer will then be transferred to the Guaranteeing Entity.
3. What is the product code?
You can identify the Islamic product by the financing type that starts with “MBI”. There will be 2 types of financing:-
A. Term Financing - MBIBG
B. Bullet Financing - MBISG
4. What is the payment structure ?
There are two types of payment structure, which are bullet and monthly equal installment. MBIBG has equal monthly installment, whereas MBISG has a bullet repayment structure.
5. Who is providing the guarantee ?
The investment notes will be guaranteed by an appointed entity (Guaranteeing Entity). The Guaranteeing Entity maintains capital and cash reserve buffers to ensure investors are paid in timely manner where Issuers are delinquent/default on payments
6. What happens in the event of delinquency/default?
When an Issuer misses a payment (≥ 15 days past due (DPD)), the Guaranteeing Entity will step in and repay the principal and returns due to Investors. The rights to claim of debt from the Issuer will then be transferred to the Guaranteeing Entity. Please note that the Grace period for Guaranteed Investment notes is 15 days from the payment date.
7. What are the risks involved?
There may be a possibility that the Guaranteeing Entity is not able to fulfill its financial obligations in a timely manner.
However, there are several mechanisms in place to ensure that the Guaranteeing Entity has the capabilities to meet its financial obligations. For instance, the Guaranteeing Entity is required to maintain capital and cash reserve buffers to ensure investors are repaid in a timely manner when Issuers default on payments.
8.Any terms and conditions to participate in GN-i?
No. GN-i is open to all Investors.
9.How do I invest in GN-i?
Guaranteed Islamic Investment Note will be made available to investors via Auto-Invest as well as Manual Investment.