ALLIANCE ISLAMIC BANK TO GENERATE POSITIVE, SUSTAINABLE IMPACT ON ECONOMY, COMMUNITY

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR, Feb 8 (Bernama) -- Alliance Islamic Bank Bhd (AIS) is striving to generate a positive and sustainable impact for the economy, community and environment while ensuring consistent, sustainable returns as part of its continued commitment to Bank Negara Malaysia’s value-based intermediation (VBI) agenda.

Chief executive officer Rizal IL-Ehzan Fadil Azim said being an Islamic financial institution means the bank needs to comply with Shariah requirements through its practices, conduct and offerings.

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“We have ingrained a Shariah mindset within the organisation to deliver initiatives focusing on impact. ‘The Halal in One’ programme helps small and medium enterprises (SMEs) along their halal journey, providing solutions to help them ‘Set Up Halal’, ‘Grow Halal’ and ‘Fund Halal’.

“To date, the programme has helped over 500 customers obtain their halal certification and disbursed more than RM1 billion in Shariah-compliant financing,” he told Bernama.

In addition, Rizal said that via the Economic Empowerment Programme aimed at elevating the economic status of micro-entrepreneurs in the asnaf and bottom 40 per cent (B40) income segment by providing entrepreneurial, financial and digital skills training, the bank had successfully trained 50 participants and approximately 74 per cent found that their income had increased.

He added that as part of the bank's commitment to the VBI agenda, the bank has also pioneered the Zakat Microfinancing Programme (AZAM), which productively distributes zakat through a revolving fund structure to help asnaf micro-entrepreneurs build a sustainable source of income.

“Aligned with the principles and goals of VBI, AZAM intends to create a greater socio-economic impact and achieve the intended outcomes of Shariah by ensuring the distribution of wealth in a just and fair manner.

“AZAM promotes financial inclusion, encourages income generation and facilitates equitable development by providing accessible and affordable financing opportunities together with structured upskilling programmes,” he explained.

Rizal also pointed out that financial institutions have been exploring different ways to deliver social finance, which are differentiated by the type of funds utilised, such as donations, waqf and zakat as well as their targeted recipients.

Rizal said AZAM distinguished itself from other programmes designed for the asnaf group due to its innovative approach to utilising Zakat Wakalah.

AZAM is a catalyst for social inclusion

Aligned with the VBI agenda, he pointed out that AZAM's future impact emphasises not only financial inclusion but also the creation of a sustainable socio-economic ecosystem as the programme envisions itself as a proactive contributor to the broader goals of VBI, ensuring that its outcomes resonate with the principles of just and fair wealth distribution, financial inclusion, and community empowerment.

He elaborated that AZAM's role in financial empowerment extends beyond the transactional realm as it becomes a catalyst for social inclusion, collaborative financial innovation, and the cultivation of a financially literate and balanced local economy.

By empowering asnaf micro-entrepreneurs, Rizal said the programme actively contributes to creating a self-sufficient and economically vibrant community, aligning with VBI's emphasis on a holistic economic development approach to community development.

He said that in the broader spectrum of financial empowerment, AZAM acts as a catalyst for social inclusion, addressing the needs of asnaf micro-entrepreneurs whereby this targeted approach ensures that the benefits of financial empowerment reach those who need it the most, contributing to a socially inclusive environment.

“AZAM's innovative revolving fund structure serves as an inspiration for collaborative financial models. In the broader context, this model can be replicated and adapted to address financial empowerment challenges in diverse communities, resonating with VBI's goal of encouraging innovative financial practices.

“We hope that AZAM serves as an exemplary model and a catalyst for other banks and financial institutions to follow suit and explore innovative approaches in social finance. AZAM also played a significant role in transitioning individuals from zakat receivers to zakat contributors, thereby contributing to a balanced local economy,” he added.

Meanwhile, the chairman of AIS’ Shariah Committee, Dr Tuan Badrul Hisyam Tuan Soh, shared that prior to obtaining Selangor Fatwa Council’s endorsement for AZAM, AIS had conducted extensive research in collaboration with scholars and experts from Universiti Kebangsaan Malaysia and Pusat Pungutan Zakat - Majlis Agama Islam Wilayah.

“The study highlighted several pertinent points related to the topic, such as the different positions held by scholars pertaining to tamlik (outright grant) of zakat monies to recipients.

“The practice of the Prophet Muhammad in zakat distribution was that camels, cows, and goats, which were collected, were not distributed directly to the asnaf. Instead, only the milk from the cattle that is the benefit of the collected zakat was given to them,” he said.

As for AZAM, Rizal noted that zakat funds are allocated as benevolent loans (Qardh) to eligible recipients, whereby AIS will bear all management costs associated with the programme, allowing recipients to repay only the availed amount without profit.

Explaining AZAM's operational model further, Tuan Badrul added that zakat funds initially serve as benevolent loans for the first three years, and repayment ensures a continuous benefit cycle for subsequent recipients, with outright distribution occurring after the third year.

-- BERNAMA