Photo taken from thestar.com.my
By Selangor Journal Staff
KUALA LUMPUR: Bank Negara Malaysia (BNM) today issued a set of guidelines in encouraging Islamic banks to increase their environmental and social prowess.
This is in a bid to improve the sector's slowing growth rates which have since built a 30% share of total banking assets in the country.
Despite this, BNM hoped that these Islamic institutions could further excel towards sustainable finance after adhering to the guidelines in their decision making process.
It was reported by Reuters that the central bank governor Nor Shamsiah Mohd Yunus in a speech said that the industry must make a choice between ignoring social and environmental issues or embrace a philosophy of finance beyond profits.
"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," she was quoted saying.
However, the guidelines are not compulsory as to date, only nine out of a total of 27 Islamic finance institutions in Malaysia have adopted the system.
Asides from implementing guidelines, BNM also published two documents on financing and investment impact assessment framework and a value-based intermediation (VBI) scorecard, for public consultation.
It also encouraged the development of green Islamic bonds (Sukuk) which combines shariah compliant principles into financing projects with environmental or social benefits.
Among the Islamic lenders incorporating VBI into their business practices include Bank Islam, Bank Muamalat, CIMB Islamic, Maybank Islamic and Agrobank.
