Nine out of 27 banks have adopted the system.
Malaysia’s central bank has issued guidelines aimed at encouraging the country’s Islamic lenders towards a “value-based” banking approach that aims to bring about a positive societal impact, reports The Star Malaysia.
The documents provides guidance to banks on how to implement the value-based intermediation (VBI) system, creating a financing and investment framework, and a VBI scorecard with the aim of guiding the decision-making processes of Islamic banks as well as the product and service offerings they roll out.
“The Islamic finance industry today faces a strategic choice - to either continue on a path that largely ignores the stark social and environmental realities that confront humanity, or to thoughtfully chart a new path that fully embraces the idea and philosophy of finance beyond profits,” Bank Negara governor Datuk Nor Shamsiah Mohd Yunus said in a keynote address at the Global Islamic Finance Forum 2018 (GIFF2018).
This involves a more conscious approach towards the environmental and social impact of projects financed by banks. It will also involve a dedicated effort to invest in human capital that will implement sustainable financing at the management level including engineering and technical skills in the design, construction and assessment of technology; science skills; and monitoring skills.
“The latter will be an unfamiliar path in many respects, but one that is far closer to the fundamental premise of shariah on which Islamic finance is based upon,” she added.
The guidelines are not mandatory as only nine of the 27 Islamic finance bodies in Malaysia have adopted the VBI system including CIMB Islamic and Maybank Islamic, president of the association of Islamic banking and financial institutions Malaysia (AIBIM) Datuk Adissadikin Ali told local media.
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