Deputy Governor, Datuk Muhammad Ibrahim, said the role of Islamic banks extended beyond being a component of a financial system, but as part of a total value-based social system, that was driven by the principle of public interest, or maslahah.
"Environmental protection and sustainability should be part of the Islamic finance agenda to ensure the fulfillment and establishments of the spirit of Islamic tenets," he said in his keynote address at conference on 'Green Financing: Discover Green Technology Industry in Malaysia' here Tuesday.
He said Islamic financing facility for green technology was another growth area worth engaging and with the necessary incentives and infrastructure in place, Malaysia's Islamic banks were capable of becoming a significant player.
"Of late, greater use of equity-based models in Islamic financial solutions has been observed. This includes participatory or equity-based contracts such as Mudarabah and Musharakah that support entrepreneurial ventures," he said.
He said in Malaysia, the adoption of these contracts has increased from 1.4 per cent in 2008 to 5.2 per cent in 2012.
"The nature of these contracts provides immense opportunities for Islamic banks to leverage on the 'green-certified' small and medium entrepreneurs to use participatory contracts which advocate profit and risk sharing between banks and the borrowers," he said.
(National News Agency Of Malaysia / 08 Oct 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com