KUALA LUMPUR (July 20): Bank Negara Malaysia (BNM), in collaboration with the Islamic finance industry, has released a Strategy Paper on value-based intermediation (VBI).

VBI is an intermediation function that aims to deliver the intended outcomes of Shariah through practices, conduct and offerings that generate positive and sustainable impact to the economy, community and environment, without compromising the financial returns to shareholders.

In a statement, BNM said the paper released today articulates strategies to strengthen the roles and impact of Islamic banking institutions (IBIs) towards a sustainable financial ecosystem.

The central bank said these strategies promote the application of VBI practices which will lead to an improved suite of products and services offered by IBIs — for better facilitation of entrepreneurship, community well-being, sustainable environment and economic growth, without compromising on shareholders' returns.

The intended outcomes of VBI are broadly similar to the objectives set by frameworks such as the Environmental, Social and Corporate Governance (ESG), Sustainable, Responsible, Impact Investing (SRI) and ethical finance.

"However, VBI is rooted in Shariah, which determines its underlying values, moral compass and priorities.

"With the adoption of VBI, practitioners will need to consider the impact of their activities and actions not only to financial consumers, but a wider range of stakeholders," said BNM.

These strategies are expected to be adopted and implemented based on each IBI's readiness.

BNM is currently inviting constructive feedback from interested parties to further enrich the content of the strategy paper. Written feedback can be submitted via email to [email protected] by Aug 31.