VBI SET TO BOOST BANKING SECTOR
Initiative, to be led by Islamic finance segment, can propel industry onto more ethical, sustainable path
LIDIANA ROSLI KUALA LUMPUR lidiana@nst.com.my
THE Value Based Intermediation (VBI), an initiative introduced by Bank Negara Malaysia recently, is set to propel the local banking landscape onto a more ethical and sustainable path.
Maybank Islamic Bhd chief executive officer Datuk Mohamed Rafique Merican believes VBI is not only beneficial for Malaysia’s Islamic finance segment, but also the overall banking segment.
“The local Islamic banking segment has been tasked with leading the way in VBI, with the conventional segment coming on board in the future,” said Mohamed Rafique at the recentlyheld National Press Club Malaysia and Maybank Islamic venture: Islamic Banking Media Workshop 2.0.
“I believe the time has come for banks to adopt a more environmentally friendly and financially sustainable business strategy.”
“In the past, banks would look at pure credit alone when it came to financing, but with VBI, banks would have to thoroughly look at the impact of that business transaction on the environment and community,” he said.
Rafique added that Islamic banks’ adoption of the VBI initiative would be almost seamless considering the ethical similarities that already exist within the Islamic finance and the VBI scope.
On that note, the VBI initiative shares similarities with ethical finance, environmental, social and corporate governance, sustainable and responsible investment and impact investing.
It will be adopted in phases by the Islamic banking industry players based on each of the institution’s timeline and capacity.
To date, nine Islamic banking institutions — Bank Islam Malaysia Bhd, Bank Muamalat Malaysia Bhd, CIMB Islamic, Agrobank, HSBC Amanah, Maybank Islamic, AmBank Islamic, Alliance Islamic and Standard Chartered Saadiq — have formed the VBI Community of Practitioners.
On Friday, six Islamic banks collectively inked a waqf fund strategic collaboration agreement to advance the VBI agenda on the waqf front.
The initiative will be launched by the fourth quarter of this year.
Islamic banking players have always seen the waqf as a valid fundraising instrument, which could play a complementary role to the more popular sukuk.
The VBI attachment is expected to raise the instrument’s profile even further.