KUALA LUMPUR (March 9): The Securities Commission Malaysia (SC) is mulling a regulatory framework for private debt instruments and direct lending to support the development of the private credit market.

The proposed framework will set out requirements on licensing, governance, disclosure and risk management, while clarifying the roles and coordination among relevant regulators. It will also cover shariah-compliant private financing vehicles and sustainability-linked products.

The initiative forms part of the regulator’s broader plans under the fourth Capital Market Masterplan 2026–2030 (CMP4), launched on Monday. 

Private credit refers to a form of non-bank financing in which investors, through capital market intermediary funds or sponsored vehicles, provide loans directly to companies. In developed markets, capital market intermediaries have increasingly ventured into private credit to diversify their offerings and expand their product suite, said the SC.

To support the development of the private credit ecosystem, the SC said efforts will be made to crowd in private capital and provide a facilitative framework for industry players.

“To kickstart the private credit industry, consideration may be given to launching pilot programmes to allow selected private credit funds to mobilise long-term, patient capital to finance priority projects,” it said.

Over the medium to longer term, the regulator may also consider establishing a digital platform to consolidate credit information from various sources, enabling data exchange for capital market products and improving regulatory supervision and surveillance. Such a platform could be supported by analytical tools such as AI-driven credit scoring and underwriting models.

The SC added that it will engage with relevant agencies to review regulations related to tax, company structures and foreign exchange to provide greater clarity for industry stakeholders.

Click here for all you need to know about the Capital Market Masterplan 2026-2030.