Islamic banks have built a 30% share of total banking assets in Malaysia, but the regulator wants them to grow further by using the guidelines for their decision making and design of financial products.

The industry must make a choice of either continuing to ignore social and environmental issues or embrace a philosophy of “finance beyond profits”, central bank governor Nor Shamsiah Mohd Yunus said in a speech.

“The latter will be an unfamiliar path in many respects, but one that is far closer to the fundamental premise of shariah on which Islamic finance is based.”

The guidelines could rekindle a long-running debate on whether Islamic banks are fully aligned with religious teachings that shun gambling and speculation.

Some analysts have argued that Islamic banks are only passively following such teachings and that a more active approach would see them involved in a wider range of activities, from microcredit to financing affordable housing projects.

The guidelines are not compulsory, however, and so far only nine out of a total of 27 Islamic finance institutions in Malaysia have adopted the system.

Besides the implementation guidelines, the central bank also published for public consultation two documents discussing a financing and investment impact assessment framework and a value-based intermediation (VBI) scorecard.

Malaysia’s capital market regulator is also encouraging the development of green Islamic bonds, or sukuk, combining shariah-compliant principles into financing of projects that have environmental or social benefits.

Islamic lenders incorporating VBI into their business practices include Bank Islam, Bank Muamalat, CIMB Islamic, Maybank Islamic and Agrobank.