Bank Islam Expands Islamic Social Finance

In pursuance of strengthening its role as a financial institution that pioneers social finance solutions, Bank Islam Malaysia Berhad (Bank Islam) launched the BangKIT Microfinance, an innovation that is funded by Sadaqah instrument which is the first of its kind in Malaysia.

The launch was officiated vritually by Y.B. Dato Sri Mustapa Mohamed, Minister in the Prime Minister’s Department (Economy). The ceremony was also attended by Tan Sri Dr Ismail Hj Bakar, Chairman of Bank Islam; and MrMohdMuazzam Mohamed, CEO of Bank Islam.

This event is regarded as the main highlight of Bank Islam’s Social Finance Month celebration throughout November 2020. It also aims to provide public awareness of the importance and functions of Islamic Social Finance in ensuring socio-economic wellbeing of Malaysia and its people, especially during this challenging time under the COVID-19 pandemic.

BangKIT Microfinance is designed to assist selected unbanked and underbanked micro-entrepreneurs to obtain capital start-up business or to expand their existing business which eventually results in building credit record so that they become qualified for other financing schemes in the future.

The new initiative is offered under Al-Qard contract (interest-free loans) and it provides financing of as low as RM500 to RM3,000 for start-up businesses and RM3,000 to RM20,000 for business expansion with a repayment period between six months and three years. Those benefiting from the programme will be provided with structured entrepreneurship training to ensure the sustainability of their business.

The Sadaqah House of Bank Islam funds this microfinance facility from donations made by corporate institutions and the public. As a start, RM2 million is allocated for BangKIT Microfinance. From this allocation, Bank Islam targets more than 200 micro-entrepreneurs to benefit, subject to the availability of funds.

In his speech at the launch, Y.B. Dato Sri Mustapa Mohamed said, “Islamic banking has great potential to utilize Islamic social financial instruments such as zakat, waqaf and sadaqah. These instruments should not be limited to the provision of basic needs and livelihood of the needy or for religious purposes such as the construction of mosques and madrasahs only. It can be expanded to help the underprivileged and the community who are severely affected by the uncertain economic situation, to enable them to be independent and sustainable in the long run.”

The Sadaqah House of Bank Islam also introduced its new official portal  to expand further the potential of the Islamic crowdfunding platform and attract the involvement from the public to contribute to creating social impact projects implemented changemakers who will be selected by Bank Islam.

The CEO of Bank Islam, MrMohdMuazzam stressed that “The bank believed that Islamic financial instruments could support Malaysia’s growth toward becoming a high-income country. We put the Social Finance initiative as part of our 2021 Strategic Goals, and we are strategising its wider implementation before the pandemic. As the world grappled with economic outcome of the COVID-19, the pandemic has in fact accelerated our social, financial mission due to he urgent need for exploring all possible options to mitigate its impact on people’s livelihood and on the national economy as a whole.”