|Related Event||: 13th International Shari’ah Scholars Forum | ISSF13|
|Date||: 1st October 2018|
|Venue||: Kuala Lumpur, Malaysia|
In 2017, the Central Bank of Malaysia (Bank Negara Malaysia (BNM)) introduced the concept of value-based intermediation (VBI) in a strategy paper titled Value-based Intermediation: Strengthening the Roles and Impact of Islamic Finance. The central idea behind VBI is to enable Islamic banks moving beyond the traditional intermediation function by creating value for all stakeholders and society at large. Put differently, VBI is an encompassing concept that calls for considering the long-term impact of the decisions of Islamic banks as well as their negative (and positive) impact on people, profit and planet. Sustainability, community empowerment, outsourcing, good self-governance, best conduct, and entrepreneurial mindset are some of key principles that underlie the VBI concept. This paper presents the concept of VBI from various dimensions including definition, benefits, key thrusts and implementation strategies. Moreover, the paper assesses key initiatives of Islamic banks―at both individual (Islamic bank) and collective (group of Islamic banks) levels―in embracing and implementing the VBI concept. The paper finds that the underlying principles of VBI are deeply rooted in the Islamic teachings; hence, VBI serves as a catalyst in unlocking the potential of Islamic finance. VBI is a response to the aftermaths of global financial crisis and to the calls for revisiting the strategic future direction of Islamic banks. Through effective implementation of VBI, it is envisaged that the Islamic banking and finance industry to propel its growth and development and chart its future directions and strategies in line with ultimate objectives of Shariah (maqasid al-Shariah).
Keywords: Value-based intermediation, value-based banking, objectives of Shariah, Islamic finance
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