How does values-based banking counter unfair terms in consumer contracts and notices in Islamic banks in Malaysia?
In July 2017, Bank Negara Malaysia (BNM) in collaboration with Malaysian Islamic finance industry, released a ‘Strategy Paper on Value-based Intermediation (VBI)’. This paper articulates strategies to promote the application of VBI which aims to improve the products and services offered by Islamic...
| Main Authors: | , , |
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| Format: | Conference or Workshop Item |
| Language: | English |
| Published: |
Faculty of Management & Muamalah, Kolej Universiti Islam Antarabangsa Selangor (KUIS)
2017
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/56526/ http://irep.iium.edu.my/56526/ http://irep.iium.edu.my/56526/1/56526_How%20Does%20Values-Based%20Banking.pdf |
| Summary: | In July 2017, Bank Negara Malaysia (BNM) in collaboration with Malaysian Islamic finance industry,
released a ‘Strategy Paper on Value-based Intermediation (VBI)’. This paper articulates strategies to
promote the application of VBI which aims to improve the products and services offered by Islamic
banking institutions (IBIs) towards a better facilitation of entrepreneurship, community well-being,
sustainable environment and economic growth, without compromising on shareholders’ returns. The VBI
is based on Sharʑah, which determines the underlying values, moral compass and priorities in Islamic
banks. With the adoption of VBI, IBIs will need to consider the impact of their activities and actions on a
wider range of stakeholders, including the financial consumers. The main purpose of this study is to
highlight the voice of banking consumers on detriments due to unfair terms in consumer contracts and
notices, which is rarely heard by IBIs and BNM. Finding in this study reveals that although BNM has
issued a number of standards and guidelines to improve fairness, transparency and governance, but the
adoption and enforcement of the standards is highly uneven across the Islamic banks in Malaysia. Using
content analysis, this study analyses the impact of values-based banking and governance in solving the
problem of unfair contract terms and notices in Islamic banks. Therefore, this paper recommends that
IBIs to take the leadership role in advocating values-based banking and governance in ensuring fair
treatment, ethical banking and a more socially responsible banking environment to the
consumers/community in line with sustainable development goals of Sharʑah. The outcome of this
study will be helpful to IBIs in enhancing their branding image and reputation towards facilitating
business success over time. |
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