Rising to the Occasion at Bank Islam

By Ahmed Wafi

Bank Islam is acclaimed for its consistent effort in bettering the economy and the nation through its many social banking initiatives. Its most recent initiative, BangKIT Microfinance, was designed to help local microentrepreneurs bloom.

Bank Islam has always been a champion of helping the needy, as seen in its flagship corporate social responsibility (CSR) initiative, AMAL. In 2018, the Bank launched a social finance initiative called Sadaqa House, named after the Arabic word for 'donation'. It is a Shariah-compliant and an innovative donation platform. The initiative operates through crowdfunding and acts as a middle ground between donors and changemakers, with oversight by Bank Islam.

In November last year, Sadaqa House launched its latest social banking facility called BangKIT Microfinance (BangKIT). BangKIT is designed to assist eligible unbanked and underbanked microentrepreneurs in obtaining capital for their business expansions. It aims to build a credit record to qualify them for other future financing.

The meaning behind the name BangKIT originated from how the facility was designed to help the underbanked micro-entrepreneurs rise to the occasion and improve their financial well-being. It’s also a good play on words combining the Malay phrase ‘bangkit’ and the English term ‘bank it’! The uppercase ‘KIT’ represents how the training and courses provided to the beneficiaries will be a necessary ‘kit’ required for entrepreneurial success.

Funded by a portion of Sadaqa House’s Perpetual Fund, the microfinance facility has the following objectives in mind:

  • To provide affordable micro-financing to microentrepreneurs
  • To equip beneficiaries and participants with ‘inclusive finance’, practical business coaching and mentoring for business development and sustainability
  • To ensure that donated funds create a social impact in perpetuity through innovative and well- governed donations made by the public
  • To nurture the beneficiaries and participants to have access to commercial banking facilities to enable better growth of business

Bank Islam’s Assistant General Manager of the Centre of Social Finance, Mohd Zikri Mohd Shairy, or Ustaz Zikry, said, “It’s apparent that many microfinance target groups are not well-versed in financial transactions and business model strategies. They tend to receive less assistance as more focus is on the bigger enterprises.”

Ustaz Zikry, who carries over 15 years of experience in the Islamic finance industry, states that “the idea of BangKIT Microfinance came about when there was a need to amplify the social impact of social finance further. After careful planning and observation, Bank Islam can handle the risk tolerance and believe that these micro-entrepreneurs have commercial value to expand their enterprises further.”

Ustaz Zikry is more than pleased to see social finance aspects being taken more seriously in the bank. “We have embarked on a lot of initiatives at the industry level, including Value-Based Intermediation (VBI), myWakaf and most recently, the iTEKAD Microfinancing Programme. I have always believed that for the industry to be more prosperous, society must prosper first. I am very optimistic about leading one of these social finance agendas, advocating and executing all the initiatives,” he says.

Sadaqa House partnered with changemakers who would be responsible for channelling the funds. It creates an impact in mainly four sectors: Community Empowerment, Healthcare, Environment and Education.

Some of these changemakers from the Community sector include Yayasan Sultanah Bahiyah (YSB), MyVista and Mercy Mission Malaysia. Recently, YSB handled a project that raised funds towards providing financial assistance to purchase business equipment for women microentrepreneurs from B40 families in Kedah.

The Institut Jantung Negara (IJN) Foundation are among its partners under the Healthcare sector, providing financial assistance to paediatric congenital heart disease patients to undergo heart surgeries at IJN.

Sadaqa House also partners with Universiti Teknologi Malaysia to provide renewable energy sources in solar panel systems for the Orang Asli community and families living in rural areas. Under the Education sector, Sadaqa House partners with Buku Jalanan Chow Kit to provide financial assistance in operating a centre that provides access to quality education for underprivileged children living in the Chow Kit area.

If you’re a microentrepreneur looking to benefit from the BangKIT Microfinance initiative, there are two application methods you could go through. First, an application is made through the appointed implementation partners or changemakers. These changemakers would then recommend the applicants to the Bank to go through an approval process. The second method would be to go directly to the Bank. If the Bank finds them eligible to receive the assistance, they will be referred and matched with the most suitable changemaker.

Having Shariah as the base of this initiative, applicants can expect interest-free financing!

“In my opinion, I feel that the best parts of BangKIT would be that it is a programme meant to help make a difference in underbanked microentrepreneurs’ lives. The process of enrolling the entrepreneurs and seeing them trained and coached is fulfilling,” Ustaz Zikry explains.

“There are many businesses who have the potential to become better, but because not everyone has the financial and business knowledge, they may not know-how. This is where BangKIT comes in to help. At the Centre of Social Finance, we realised that as a member of society, it is our social responsibility to help uplift the community in ways that are possible,” he continues.

The facility provides financing as low as RM3,000 and up to RM20,000 for business expansion with a repayment period between six months to three years.

If you’re interested in donating or being a beneficiary of Sadaqa House’s many initiatives, including BangKIT Microfinance, click here!

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