Agrobank: Uplifting the lives of the underserved, unserved segments of the society

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Agrobank (Agricultural Bank of Malaysia) has been championing the Malaysian Government’s initiatives towards achieving full financial inclusion which would improve the lives of underserved community and drive economic growth.

 

One of the financial inclusion programs of the Bank is the expansion of Islamic finance to the agriculture sector, and the increasing demand for Halal foods has created opportunities for the Bank to complete the chain of Halal production business through the provision of Shariah compliant financial products and services. As part of its strategic move to provide Islamic finance to the rural and agricultural markets, Agrobank has successfully transformed itself to become a full-pledged Islamic financial institution on July 1, 2015. Through the selection of a whole range of Shariah-compliant financing, the Bank has given more confidence to entrepreneurs, food operators and customer to conduct their business in accordance to Shariah principles. The impact of Agrobank’s success to Islamic banking sector and the broader economy is significant, through a great extent, it directly brought almost entirely rural and agriculture sector into Islamic banking.

 

To promote a favorable environment for the underserved and unserved segments as well as promote their competitiveness, Agrobank has developed suitable financing programs to address the specific needs of the rural agricultural community. One of these is the “Paddy Credit Scheme” or also known as Paddy-i. Through effective collaboration with Padi Beras National Berhad (BERNAS), Agrobank has been instrumental towards development of paddy cultivation designated areas in the state of Keddah and Perlis.  Starting from Muda Agricultural Development Authority (MADA) designated areas, Agrobank had also been the financier for paddy farmers registered with the Kemubu Agricultural Development Authority (KADA) and Integrated Agricultural Development Area (ADA). Today, Agrobank has expanded the scope of Paddy-i financing to new rural areas in Kota Belud (Sabah), BatangLupar (Sarawak), Rompin and Pekan (Pahang) with the opening of new mega-paddy cultication areas that exceeded 19,000 hectares with 12, 237 registered farmers.  In 2015, the combined paddy production of in these areas amounted to 1.9 million metric tons, which represents 73% of the total national paddy produce. This in effect brought the self-sufficiency level of the nation’s paddy to 71%.

 

As part of the Bank’s role in elevating the social well-being for the underserved and unserved segments, Agrobank has also launched a financing program dedicated to person with disabilities called “Agro Bakti”, the first of its kind in Malaysia. The introduction of this program underlines the Bank’s developmental and mandated role in providing services for the unserved and underserved community in agricultural related activities by providing this particular groups the chance to procure working capital to run their business that will help improve income level. In doing so, this program uplifts the socio-economic status for the disable community and allows them to contribute to the nation’s  development and prosperity.

Through effective collaboration with the agencies, Agrobank will be able to reach out to target segment and support the Government’s 11th Malaysia Plan for greater inclusiveness towards a fairer society and elevate the social well-being of agricultural community.

Agrobank’s “Financial Inclusivity: Agriculture Community and Under-served Segment” won the 2016 ADFIAP Outstanding Development Project Awards under the Local Economic Development category.

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