1. By Nilammasri Ja’afar Senior Vice President/Head Micro Finance Asia Microfinance Forum 4-8 August 2014 Shanghai, China

2. 2 Regulated & Supervised by Ministry of Finance and Bank Negara Malaysia BSN’s Objectives: Promote and mobilise savings, particularly from small savers Inculcate the habit of thrift and savings. Provide an avenue for savings to the general public. Utilise excess funds of the Bank to help finance economic development of the nation Established under the Act of Parliament 146 - Laws of Malaysia 1974.

3. 3 59 Micro Finance Centres 401 Branches 100% nationwide coverage 899 ATMs 6,800 Employees 344 CDMs 10 Mobile Banking Units 85 Islamic branches 5,300 agents > 8.5 mil customers > 0.7 mil SMS Banking Users > 0.35 mil Internet Banking Users

4. 4 Under-served communities Non- urban areas Non-economical areas Low population Mandated to BSN ; Providing Financial Access A better way… Cheaper cost to serve Scalability Reach Financial services to micro entrepreneurs – viable middle to lower income businesses

5. 5 Customers visiting branches Normal Practice Bring BSN to the Community Innovative Idea Online Real-time Online Real-time Form-based Manual input Fixed line Longer process Less Coverage Formless Automated Wireless GPRS Simplified process Increased coverage Services: Savings & Deposits, Bills & Loans Payments, Remittances & Cashless Payments

6. 6 1 Brick-and-Mortar Branch 100 Innovative Agent Banking Outlets Agent Banking Set-up Cost Cost Comparison – Branch VS ATM-Off Premise VS Agent Banking Cost Effectiveness : Branch VS Agent Banking

7. 7 Supports the Government ‘s National Agenda National Blue Ocean Strategy (Cost effectiveness, rapid expansion, high impact) Financial Inclusion Expansion & development of local communities BSN agents are also agents of growth in their own communities Knowledge of IT and banking Reduces BSN’s carbon footprint Reduces setup of brick-and-mortar branches Carbon-friendly as less emission of CO 2. Perpetual demand for banking services sustains BSN’s growth Longer working hours: 8am – 10pm The Nation Communities & BSN agents EnvironmentBSN

8. 8 Un-served 12 Un-served 12 Served 388+495 Served 388+495 99% 1% Total Sub-District 895 Total Sub-District 895 Un-served 507 Un-served 507 Served 388 Served 388 43% 57% Total Sub-District 895 Total Sub-District 895 Before BSN Agent BankingAfter BSN Agent Banking By end 2014, BSN would have covered 100% of the Sub-Districts in Malaysia, with an additional 1,000 agents to be appointed.

9. Assists the poor to generate income & employment via self employment i.e. micro enterprises. Ultimate objective is to alleviate the poor out of poverty. Micro Finance is viewed as a development approach that provides financial as well as social intermediation. 9 The other key objective is to transform fledgling micro enterprises into the next level i.e. SMEs

10. 10 Micro Enterprises comprised 77% of all SMEs in Malaysia Employs 1.3 million workers or 36.5 % of all SMEs Average 3 workers per establishment Source Economic Census 2011, Profile of Small and Medium Enterprises by Department of Statistics, Malaysia

11. 11 Sources of financing by size of SMEs, 2010 Only 17.4 % of micro enterprises relied on financing from financial institutions (FIs) Source SME Census 2011, Department of Statistics, Malaysia (DOSM) Micro enterprises lacked financing from FIs due to :-  Lack supporting documents-no proof of income & expenses  No collateral  High transaction cost- small loan sizes

12. 12 The National SME Development Council (NSDC) mandated BSN to be a specialized Micro Finance (MF) institution in 2006. BSN launched its MF Program on March 15, 2007, to provide financing facilities to viable micro enterprises.

13. 13 Small Financing Amount Funding for Business Purposes Easy Fast Convenient Financing Amount From RM5,000 To RM50,000 No Collateral Minimum Documentation Simple Financing Procedures Approval - 6 Working Days Disbursement - 4 Working Days Widely Accessible 59 Dedicated MFC 401 Branches 5,300 EBB Financing to All types of Micro Enterprises / Self- employed Individuals

14. 14 Besides providing credit facilities, BSN also extends:- Savings Access - Customers required to save via regular monthly deposits Insurance/Takaful Protection Covers loans in cases of death or total permanent disability. Additional monetary benefits for customers (optional) Advisory services  Capacity building & skills training programs  Instilling financial discipline & record management  Business & loans counseling  Credit clinics

15. 15 Financing facilities are offered on market rates Effective selection & screening process- loans/financing are extended only to viable micro entrepreneurs Leveraging on existing Bank network of 401 branches and 5,300 EBB agents for:- Deposits Loan repayment Sourcing of new credit applications Collaboration with governmental agencies for capacity building programs

16. 16 Micro enterprises gained in terms of:- Income & asset growth Creation of new jobs in local communities Expansion- new markets/products Graduation to the next level of SME Pre FinancingPost Financing

17. 17 Agent Banking (EBB) Micro Finance (MF) Synergy Providing MF to the appointed EBB for business expansion Existing MF customers to become EBB

18. 18 579 EBB / MF Customers (11%)

19. 19 EBB M F

20. 20 THANK YOU