Covid-19: reinforcing the impact of Islamic banking through value-based intermediation

The novel Covid-19 pandemic has caused an unprecedented human crisis around the globe. The necessary actions implemented to contain the virus have sparked both economic and social downturn. It shows the fragility and unpreparedness of the economy to face such a pandemic. Significant weakening of economic conditions has escalated the pressure on households, businesses and financial markets. However, before the Covid-19 outbreak, Bank Negara Malaysia has taken a new initiative by introducing Value-Based Intermediation (VBI). VBI’s strategy opens up a new holistic layer for Islamic banks in providing the public at large with impactful and profitable services. This paper discusses VBI’s strategy and its potential application from the viewpoint of Sharīʽah. This paper also discusses Islamic banks' activities in implementing VBI as well as their response to the Covid-19 pandemic, based on qualitative inquiry. The paper concludes that VBI is a long journey that requires significant transformation of mindset among key stakeholders. As Covid-19 has adversely impacted communities in several ways, Islamic banks could empower communities through provision of financial solutions that create positive impact.