KUALA LUMPUR, Oct 3 (Bernama) – Members of the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) have agreed to adopt the value-based intermediation (VBI) concept on a voluntary basis.
VBI aims to deliver the intended outcome of shariah through practices, conduct and offerings that generate positive and sustainable impact to the economy, community and environment, going beyond mere compliance towards delivering value propositions.
AIBIM President Datuk Adissadikin Ali said the VBI concept paper was introduced last year by Bank Negara Malaysia (BNM), but the adoption is on a voluntary basis.
He said sustainability is one of the principles of Islamic finance, and adoption of the VBI would further prove the sustainable practice among the members.
“Although we (the members) have agreed to adopt VBI, the manner might differ under the VBI scorecard, the matrix of which is basically about people, planet, profit and progress.
“It is about individual banks’ journey, but it will benefit the industry and the society as a whole,” he told reporters on the sidelines of the Global Islamic Finance Forum 2018 (GIFF 2018) here today.
Adissadikin, who is also RHB Islamic Bank Bhd’s Chief Executive Officer, said out of 27 Islamic banks in Malaysia, nine have adopted the VBI concept and the rest are expected to follow suit.
Meanwhile, BNM released the VBI Impact Assessment Framework and the VBI Scorecard today.
The assessment framework provides guidance on the assessment of financing and investment applications, taking into consideration economic, social and environmental impacts, while the scorecard supports the implementation of performance measurement frameworks for Islamic financial institutions that drive positive value and impact on society and the environment.
On industry outlook, Adissadikin said the local Islamic banking industry is confident that it will be able to boost its market share of total banking assets from 30 per cent currently to 40 per cent by 2020 with the adoption of the VBI.
He said globally, Islamic finance will reach a global asset volume of no less than US$3.8 trillion by 2022, up from US$2.2 trillion at the end of 2016, with an expected compound annual growth rate of 9.8 per cent on the back of strong demand for sustainable and socially responsible investment.