Angkasa to launch own Islamic bank

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KUCHING:  The National Co-operative Organisation of Malaysia (Angkasa) would soon launch its very own bank to be named the Islamic Co-operatives Bank (ISCO Bank).

FOR YOU: Baharum (left) presents a gift bag as token of appreciation to Assistant Minister of Modernisation of Agriculture (Farmers Organisation and Co-operatives) Datuk Peter Nyarok Entri for officiating the seminar last weekend.

Currently subjected to approval by the Malaysian Co-operative Council (SKM), Angkasa has already come up with a blue print that is modeled on commercial banks. The different however was that the proposed ISCO Bank would operate on an equity based financing.

Speaking to a press conference after the launch of a state Angkasa seminar titled ‘Co-operative opportunities under the New Economic Model’, its president Professor Dato Dr Mohd Ali Baharum said, “Angkasa has completed its research and already came up with all needed information.

“In fact, a blue print has been submitted to SKM on June 30 with complete details on the bank operational concept. Angkasa along with SKM will focus on the bank’s three main activities which regards to personal loan, housing loan and Co-operatives Property Development which is financing to develop properties belong to a co-operative.”

Using the housing loan process as an example,  Baharum stated that under the equity financing based ISCO Bank would adopt, houses bought were technically rented to the buyer until the payment is finished.

“One of the advantage of applying to ISCO Bank is that the loans only needed to be service for about 20 years instead of the 35 years on offer through conventional commercial banks. The repayment scheme is one of the advantage of ISCO bank,” he continued.

Baharum also noted that the paper work would not take a long time as co-operatives are familiar with the financial operations.

Another take on the financial institution project in the mentioned was that the bank licence would not be under Bank Negara but under SKM.

He stressed that Angkasa has been ordered to establish a pro-tem committee to establish a new co-operative which however would not be under Angkasa. The new co-operative would only act as an organiser and also member (if possible) and therefore, Angkasa’s  role was only to sponsor the bank and not administrate it.

“To make sure that the bank operates smoothly, Angkasa has asked to become the member because by law, it is not allowed so. We will wait for the Domestic Trade, Co-operatives and Consumerism Minister Datuk Ismail Sabri Yaakob to sign for the approval of Angkasa to become members of the new co-operative.

“The paid up model for the bank start up is about RM300 million minimum which is finance from the existing 560 co-operatives from the banking and credit sector. These co-operatives would automatically be appointed to become associates/affiliates,” said Baharum further explaining the concept.

He also noted that co-operatives from the agriculture sector such Felda and Felcra and many more has also expressed their interest to join in the bandwagon and this also included school operatives who wished to become shareholders.

Touching on the shareholders, Baharum stated that the minimum needed was at least RM1,000 and the maximum however was limited to RM5 million.

“They would give the money to the members. In other words, these are the ‘branches’. We are not calling it branches because we Angkasa do not own the banks. The financial constitution would work on a commercial bank blue print but the images would be enhanced to suit of the co-operatives objective.

“Therefore, ISCO Bank would be able to give loans at the lowest of interest because of its smaller operating cost. In terms of interest, we will try to find the cheapest outsource to lower it down. Therefore interest rate depends on the best out-sources we can get from our own member. This also included outside sources which is currently in still in search.”

Baharum also pointed out that priority for the bank’s services would be given to co-operative members and therefore one would need to become a member to enjoy the facilities.