Group 2

Contextual: Bank Muamalat


4 January 2022

The world is complex, and so are the social and environmental challenges we face. Significantly, values-based banks recognise that these challenges are linked. Therefore, they do not consider them in isolation, although their activities may be focused on specific areas. What matters most is that values are reflected, intentional and appropriate to bring positive social and environmental impact in a particular context


Since its inception in 1999, Bank Muamalat in Malaysia has understood that a contextual approach to banking is needed due to the culture, regulatory regime, and market conditions in which it operates. Yet, the values of human dignity and social inclusion guide the context in which the bank operates.  

Three such examples are Bank Muamalat’s role as a channel for financial empowerment to Small Medium Enterprises (SMEs), its role in access to housing, and its role in the pandemic crisis. 

While supporting the national agenda, Bank Muamalat is actively seeking partnerships with other organisations to ensure that the impact of its activities is far-reaching amongst SMEs. To this end, Bank Muamalat has partnered with SIRIM (a government development agency for MSMEs and SMEs) and Majlis Perbandaran Kota Bharu (MPKB), one of the earliest local municipal councils in Malaysia in the state of Kelantan, which has the lowest household income nationwide¹ . This collaboration creates prospects for Bank Muamalat to reach underserved entrepreneurs and businesses whilst enabling the entrepreneurs and businesses access to fund future growth and contribute to the Government’s agenda to boost the SME economy from 38% to 50% GDP by 2030. 


Bank Muamalat offices

The Bank also aims to improve communities’ quality of life by promoting financial inclusion. They do so by aligning with the national agenda of easing access to financial services for every segment of society. Amongst the initiatives identified is to provide financing for affordable homes for the lower-to-middle income. Bank Muamalat introduced a new SMART Mortgage Solution and SMART Home Package home financing product and collaborated with Syarikat Jaminan Kredit Perumahan (a home Credit Guarantee provider) and Skim Rumah Pertamaku (First Home Buyer Scheme) to provide home financing to low-income earners, self-employed individuals and operators of small business entities. 

During the pandemic crisis, Bank Muamalat has been one of the participating banks in schemes introduced by both the Government and the Central Bank of Malaysia in easing the hardship of citizens affected by the pandemic, such as granting a 6-month moratorium to alleviate the financial burden of Malaysians. 

As it moves forward and amidst the ongoing challenges of the pandemic crisis, Bank Muamalat aspires to become a financial institution that continuously gives equal emphasis to economic value creation while upholding ethical values. Bank Muamalat believes that its approach to Islamic banking, based on “Non-Interest Finance”, is a values-based banking model. Banking on values provides the pathway for Islamic banks to deliver deeper value propositions and holistically embrace Shariah principles


¹ Source from Household Income and Basic Amenities Survey Report 2019, Department of Statistics Malaysia. 


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