BANK NEGARA DEVELOPING SCORECARD ON VBI INITIATIVE
Bank Negara working with 9 institutions to realise full potential of Islamic finance
BANK Negara Malaysia is developing a scorecard with Islamic banking players that will measure the adoption of value-based intermediation (VBI) initiative.
Deputy governor Abdul Rasheed Abdul Ghaffour said the VBI marks the next step to realise the full potential of Islamic finance.
The VBI initiative will be adopted in phases by Islamic banking players based on each of the institution’s timeline and capacity.
To date, nine Islamic banking institutions — Bank Islam, Bank Muamalat, CIMB Islamic, Agrobank, HSBC Amanah, Maybank Islamic, AmBank Islamic, Alliance Islamic and Standard Chartered Saadiq — have formed the VBI Community of Practictioners.
“The move towards embracing VBI is another hallmark in Malaysia’s journey to manifest the larger aspiration of Islamic finance,” Rasheed said at a VBI dialogue attended by more than 300 participants, including those from banks, academicians and regulatory agencies.
VBI will be a game changer giving equal weight to both economic value creation and upholding ethical values. While VBI shares similarities with ethical finance, environmental, social and corporate governance and sustainable, responsible, impact investing, the distinguishing factor is the syariah aspect.
“Its adoption will further strengthen self-discipline within Islamic banks,” Rasheed said, adding that greater accountability and integrity would lead to better offerings and treatment of customers and employees.
Business propositions from new sectors, such as small and medium enterprises, would benefit from financial applications based on potential value creation and not just credit scores.