REDZUAN YAACOB SENIOR DEPUTY CHIEF EXECUTIVE OFFICER TEKUN NASIONAL, MALAYSIA 13 NOVEMBER 2015 KAZAKHSTAN

Source : Department of Statistic, Malaysia TOTAL : RM1,395,657.2 M USD 325, M ISLAMIC BANKING IN MALAYSIA, 2015 RM367,167.0 M (USD 85, M) RM1,018,408.4 M (USD 237, M) RM10,083.8 M (USD 2, M) USD 1 = RM 4.29

Source : Department of Statistic, Malaysia TOTAL : RM367,167.0 M (USD 85, M) ISLAMIC BANKING IN MALAYSIA, 2015 RM12,000.0 M (USD 2,797.2 M) RM355,167.0 M (USD 82,789.5 M) USD 1 = RM 4.29

ADVANTAGES OF ISLAMIC MICROFINANCE COMPATIBLE With religious belief INVESTED DIRECTLY Into the business venture PROMOTES ETHICAL Investment & business practices DEVELOP TRUST & UNDERSTANDING between lender & borrower MORE APPROPRIATE FINANCING for a diversity of microfinance approaches

CONCEPT OF ISLAMIC MICRO FINANCE Cost plus mark up Tawarruq Silent partnership / profit sharing Mudharabah Joint venture partnership Musyarakah Benevolent loan Qard Hasan Remark : Central Bank of Malaysia has prepared the Resolutions of Shariah Advisory Council of Bank Negara Malaysia through resolved that deposit product and financing based on the concept of tawarruq is known as commodity murabahah is permissible.

CONCEPT OF ISLAMIC MICRO FINANCE ENTREPRENENUR BURSA SUQ AL SILA (Trading & Clearing Engine ) COMMODITY SUPPLIERS 1 COMMODITY SUPPLIERS 2 COMMODITY SUPPLIERS 3 Purchasing Commodity ( Pool of suppliers ) Cash Payment 1 3 Selling Commodity Deferred Payment 2 6 Cash Payment Selling Commodity 5 4

COMPARISON OF FINANCING RATE OF ISLAMIC MICRO FINANCE 10% 6% 5% 6.38% 7.92% 4% * Flat Rate

THE PRODUCT OF ISLAMIC MICRO FINANCE Micro credit financing practices Use the service as they can pawn their gold To get instant cash with less risk Quick and easy for majority of women in lower income group Group Financing Self select members into group of five (5) Member identifies the purpose of their loan Members to maintain regular payments Monitoring and peer support

TEKUN’S EXPERIENCE OF ISLAMIC MICRO FINANCE MATTER THE TEKUN was incorporated as a Foundation and registered as a Company Limited by Guarantee ( non-profit organisation ) Running the program with conventional practices TEKUN implement Tawarruq concept TEKUN implement Qardhul Hasan / awarenessTawarruq concept

TEKUN’S EXPERIENCE OF ISLAMIC MICRO FINANCE PROBLEM : HIGH NPL NEW PRODUCT GROUP FINANCING Loan disbursement Member identifies the purpose of their loan Self select members into group of five (5)

TEKUN’S EXPERIENCE OF ISLAMIC MICRO FINANCE Loan Disbursement RM 45,043, (USD10.5 MIL) No of Group1,361 No of Borrowers6,807 Repayment : 197%

THE MODELS – FOCUS OF ISLAMIC MICRO FINANCE MATTER THE With the success of group financing, TEKUN will focused over 60% of this model to sustain in the market

TEKUN’S ACHIEVEMENTS OF ISLAMIC MICRO FINANCE Loan Disbursement RM 3,623 MIL (USD 844 MIL) No of Entreprenenurs: 322,474 No. of Loan 424,563 No of Staff: 970 No of Branch : 222 Outstanding Loan : RM 1,600 MIL (USD 381 MIL)

TEKUN SUCCESS STORY OF ISLAMIC MICRO FINANCE MATTER THE

OUTCOME OF ISLAMIC MICRO FINANCE Poverty Eradication Financial Inclusion Ensure that every economic activities & segment of society has access to financial services Access to Financing Access to financial services Access to financial assistance Access to financial information

CHALLENGES OF ISLAMIC MICRO FINANCE 1.High cost of capital 3. Lack or entrepreneurial development scheme 2. Sustainability 4. Extending loan with competetive profit rate 5. Improvement of work process 6. Operational capacity

WAY FORWARD OF ISLAMIC MICRO FINANCE MOBILE BANKING Banking System & Payment Gateway as a platform for TEKUN AR RAHNU ISLAMIC PAWN Ar Rahnu (the borrower is required to place a valuable asset for the loan extended by the lender and it may be utilized as payment if the debt is not repaid within the agreed period) FINANCIAL LITERACY Skills and knowledge that allows an individual to make effective decisions with all of their financial resources ACCEPTANCE OF ISLAMIC MICROFINANCE financial inclusion entrepreneurship risk-sharing through partnership financing

REDZUAN YAACOB