Bank Negara Malaysia has issued a Guidance Document on Value-Based Intermediation Financing and Investment Impact Assessment Framework
(‘Guidance Document’) on 1 November 2019.
The Guidance Document outlines the framework to facilitate the establishment of an effective risk management system by an Islamic Financial Institution (‘IFI’) in relation to its financing and related advisory services and investment activities that integrate the Value Based Intermediation (‘VBI’) considerations set out in the Core Value Intent (CVI) to be formulated by the IFI.
The VBI-based management system is intended to set out an overarching framework that defines the guiding principles and other requirements involved to operationalise the IFI’s VBI strategy, identify, measure, monitor, mitigate and report risk exposure that may arise, on a dynamic and on-going basis.
The Guidance Document contains, among others –
- a description of key ides (such as attainment of benefit and prevention of harm, integration of Shahriah, fairness and transparency, and constructive and inclusive collaboration with stakeholders);
- guidance on key principles that interpret the practical application of the key ideas (such as role of the board, integration of Shariah governance, integration of VBI responsibilities across key functions, and self-governance); and
- examples of best practices adopted by various financial institutions and practitioners.
The Value-Based Intermediation Financing and Investment Impact Assessment Framework embodied in the Guidance Document was prepared by Bank Negara Malaysia in collaboration with the VBI Community of Practitioners, the International Centre for Education in Islamic Finance and the World Bank Group (Malaysia Office), with input from the World Wide Fund for Nature (Malaysia and Singapore Offices) and feedback received during a one-month public consultation which ended on 30 November 2018