Malaysia urges Islamic lenders towards 'value-based' banking | Asian Banking & Finance
,Malaysia
2 views

Malaysia urges Islamic lenders towards 'value-based' banking

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.

Also read: Can Islamic fintech gain momentum in 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).

Also read: Outdated property rules may bite Malaysia's Islamic banks

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. 

Get Asian Banking & Finance in your inbox
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

The number of HNWIs is expected to reach 3.9 million in 2021 or 60.6% of the population.
Banks have to remain consistent and continuous in testing best practices.
Shares were priced at the top end, at KRW39,000 ($34).
In January, 1.2 million transactions were carried out via the SGQR.
Its launch will require legal changes to the nation’s foreign exchange and IT rules.
But less than half of consumers are impressed with the digital financial services currently offered.
Treasury teams can mobilize liquidity and fund intraday payments in real-time.
Customers have the option to pay their tax balances in full or partially.
About 750 new accounts have been opened in four APAC markets through the new portal.
UnionDigital will be a wholly-owned subsidiary of the Philippine lender.
SmartStream’s Peter Hainz and Amazon Web Services’ Anna Green shared their insights on the advantages of on-demand and highly scalable cloud environments for banks and other financial institutions, as well as the factors hindering its adoption in the region.
This August, the Asian Banking & Finance and SAP will provide insights on the evolving landscape for ESG in financial services.
Thirteen lenders noted that demand was moderately weaker than the preceding 3-month period.
Investors will likely seek signs that private lenders will be able to step up lending once COVID subsides.