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Bank Negara Malaysia issues guidelines for Islamic lenders towards ‘value-based’ banking

Bank Negara Malaysia issues guidelines for Islamic lenders towards ‘value-based’ banking

(4 October 2018 – Malaysia) Malaysia’s central bank has urged the country’s Islamic lenders to adopt a “value-based” banking approach in order to bring about a positive societal impact.

The guidelines issues by the central bank provides a road map 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.

In a keynote address at the Global Islamic Finance Forum 2018, Bank Negara governor Datuk Nor Shamsiah Mohd Yunus said, “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”.

This involves amore conscious approach towards the environmental and social impact of projects finance 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.

Nine out of the 27 Islamic finance bodies in Malaysia have adopted the VBI system including CIMB Islamic and Maybank Islamic.

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