ISLAMIC FINANCE REVIEW | DECEMBER 2015
SUCCESS STORY
There are numerous companies engaged in halal businesses – from large to small & medium size enterprises – which receive banking facilities of different types from Agrobank. As a Development Finance Institution, Agrobank can potentially provide an example of cooperation between banking and finance and the real economy – all in a Shari’a compliant way.
Agrobank recently provided financing worth RM126 million to one of the biggest frozen halal meat companies in Malaysia, Ramly Burger/ Ramli Food Industries
a total funding of RM 11.28 billion, which represented almost 1/4 of the market share of primary agriculture (food) financing in the banking system.
AGROBANK – A NEW MODEL OF ISLAMIC BANKING Agrobank is a bank with direct involvement in the real economy – something that has been emphasized by the proponents of Islamic banking right from the beginning and what remains a challenge in Islamic banking and finance. Other high street banks in Malaysia – both Islamic and conventional – primarily focus on the consumer banking and corporate segments. Agrobank, on the other hand, targets farmers and other businesses related with agriculture to ensure that the government’s development agenda and its policy of financial inclusion are implemented.
including Hartani-i, AgroCash-i, MAEF-i and Ar Rahnu. In 2014, Agrobank accounts for 32% of financing provided to Malaysia’s food production sector, a vital sector in the gross domestic product (GDP) of the country. Emphasizing on the importance of food, Dato’ Wan Mohd Fadzmi Wan Othman commented, “Food is synonymous with agriculture sector and halal factor is essential to the Muslim community. After the conversion to a full-fledged Islamic bank, we are able to provide Islamic banking products and funding to complete the cycle of halal food production.”
By offering Shari’a compliant financing, Agrobank gives additional confidence to entrepreneurs in agriculture sector (also called agropreneurs), food operators and customers to conduct their business in accordance with Shari’a principles. Even though Agrobank’s journey to become a full-fledged Islamic bank was challenging, its efforts and hard work have started to contribute to strengthening the Islamic economy.
GIFA RECOGNITION In recognition of Agrobank’s efforts in promoting Shari’a-compliant banking and supporting Malaysia’s efforts as a global Islamic financial hub, the bank was awarded the “Upcoming Islamic Bank 2015” by Global Islamic Finance Awards (GIFA) in a ceremony held in Manama, Kingdom of Bahrain. Commenting on this international recognition gained, Dato’ Wan Mohd Fadzmi Wan Othman said, “We are deeply honoured to receive this prestigious award. This is recognition for all our employees who have worked tirelessly in seeing through the conversion of Agrobank to be a full-fledged Islamic financial institution”.
“Innovation and product diversity are integral to the further development of Islamic banking and finance. Since Islamic banking mainly focuses on asset financing, there is a dearth of products to cater for different financial needs of business, particularly the SMEs,” stated Dato’ Wan Mohd Fadzmi. In order to cater for this growing demand, Agrobank provides a wide range of financial products and services including trade finance for SMEs in the agricultural sector. Other products and services are in the areas of consumer banking, business banking, electronic banking and deposit services
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PCEO of Agrobank, Dato’ Wan Mohd Fadzmi receives ‘Upcoming Islamic Bank” award during GIFA 2015