Islamic banking is built on the tenets of financial inclusiveness, fair and justice. In the Malaysian context, it has been further strengthened with the Value Based Intermediation (VBI) framework, which is supposedly distinct from conventional banking. In terms of marketing and communication, terms and jargons such as Profit and Loss sharing, Risk Sharing have been thrown in to further justify and validate its so-called distinctiveness.
Is what is being preached is really practised?
Let us take a look at the most recent incidence, the major floods about a month ago, whereby quite a number of assets financed under Islamic finance/banking products, such as vehicles and homes which were severely damaged with a number of them totally wiped out.
Why didn’t the Islamic banks come forward and announce their stance of sharing the losses? Why the deafening silence of sharing not only the profit, but the loss as well?
If only they have shown, the REAL sweet and compassionate side of Islamic finance, this would have been a golden opportunity to really capture the market, apart from genuinely practising what they preach. It would be a genuine VBI.
Or is it another ‘green wash’? That it is actually just a camouflaged conventional finance?
By Assoc Prof Dr Baharom Abdul Hamid