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Islamic Co-operative Bank

Angkasa proposes Islamic co-op bank

Written by Chua Sue-Ann Available at:

KUALA LUMPUR: The National Cooperative Organisation of Malaysia (Angkasa) has submitted its proposal to the government for the establishment of an Islamic cooperative bank and plans to turn some 560 existing credit cooperatives nationwide into sub-branches. Angkasa president Datuk Dr Mohd Ali Baharum handed the proposal to Domestic Trade, Cooperative and Consumerism Minister Datuk Seri Ismail Sabri Yaakob after a meeting in parliament on Wednesday, June 30.

Speaking about the proposed cooperative bank at a press conference afterwards, Mohd Ali said Angkasa aimed to set up at least one bank branch in every state and transform existing credit cooperatives into “sub-branches”. “Angkasa does not want to compete with existing banks but wants to strengthen credit cooperatives,” Mohd Ali said. Angkasa had suggested that the bank be named Islamic Cooperatives Bank of Malaysia, he said. The proposed Islamic cooperative bank would have a paid-up capital of RM400 million, above the RM300 million minimum, Mohd Ali added.

He said Angkasa would prefer the cooperative bank to be established under the Cooperative Commission of Malaysia (CCM), but would leave the final decision to the government and Bank Negara Malaysia (BNM). At the same press conference, Ismail said the government would study Angkasa’s proposals but noted that the establishment of the bank would be subject to the central bank’s regulations.

“We welcome the proposal… the cooperative bank would focus on serving smaller towns and rural areas, currently without banking services, for example, Sarawak’s interior,” Ismail said. “If all goes well, we expect to finalise the details of the proposed Islamic cooperative bank by April 2011 and it should be operational by the middle of next year, subject to BNM regulations.”

Ismail brushed off allegations of mismanagement and malpractices in Angkasa that were raised in the run-up to the cooperative body’s annual general meeting as “internal politicking”. On Jan 8, 2009, Royal Prof Ungku Abdul Aziz stepped down as Angkasa president after helming the body for 37 years, citing disappointment that investigations into alleged misappropriation of funds in the organisation had borne no fruit.

Angkasa (Angkatan Koperasi Kebangsaan Malaysia Bhd in Bahasa Malaysia) was established in 1971 to coordinate the numerous cooperatives in Malaysia. Ismail said the Islamic cooperative bank, if it comes to be, would be the country’s third cooperative bank, joining the country’s largest cooperative bank Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) and the Cooperative Union Bank (Koperasi Bank Persatuan Malaysia Bhd, formerly Province Wellesley Cooperative Banking Union Ltd). The minister however declined to elaborate on the union-based bank, saying more details would be announced at a later date.

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  • University of Glasgow, Scotland


    1. Ben Othman says:

      Greetings to All,

      Angkasa proposes Islamic co-op bank .

      Questions to be asked;

      1) Why a Bank? Why not an Islamic Investment Company to cater for long term investments.Or why not force these cooperatives to invest in existing Tabung Haji. Save much time,money, searching for a CEO who may again fail us.

      2) f it is under the purview of Bank Negara (Central BANK )
      Islamic financings will be Banking financing.i.e Short term
      fixed return type of financing.

      3) Can 5,000 Muslim cooperatives be succesfully merged?
      Look at Sime Darby and judge what forced merger did.

      4) Could this be a bail out of failed cooperatives?

    2. Razman says:

      This is a good idea. Angkasa has been successful managed.

      a) Bank is better as its create more jobs. Investment set-up use less man power. Money & time factor more the less the same. investment set-up also need to appoint board of trust apart from searching for CEO.

      b) Need to know the how the cooperatives been running to know its success. Not to compare with Sime darby. its irrelevant. Compare it with bank Rakyat.

      c) Islamic finance is very wide. Not only cater to fixed income. It got musyarakah (joint venture), mudarabah, murabahah (cost plus). It good if this cooperative could create new islamic products.

      d) If it a bail out for failed cooperatives then it will bring good thing to the table. It will create more successfull cooperative. In the end, it all depend to how you managed it.

    3. Ben Othman says:

      Thank You Razman.If I may add for discussion sake.

      Banks create more jobs.?
      I have been in Islamic and riba banking for 32 years.With the advent of computerization and what I heard everyday is banks want to downsize staff at every opportunity.There is strong likelihood that staff of 5,000 cooperative societies will be retrenched.

      The merger of 5.000 cooperative societies.
      My point is mergers seldom bring in the desired objectives.Mergers and takeovers in whatever industry may produce resentment and demoralisation leading to refusal to participate that may also result in sabotage in extreme cases. Sime Darby has 100,000 staff from the mergers of 4 big plantation companies.5,000 cooperatives have many more stakeholders who will fight for their interests.Lest you forget, cooperative shareholders/members have more rights than others.

      Mergers create new products.?
      Cooperative members are users of finance products i.e loans and normally that is the main aim of becoming a member.Mergers may create a wider pool of retail banking clientele .As I mentioned, if it is a banking
      type of thing under present scenario equity financing such as musyarakah
      will have to take back stage.Like Bank Rakyat ,banks like the secured and easy way out doing BBA with deduction of salary.

      Bailout will create more succesful cooperatives?
      If it is a bail out, it will be a waste of tax payer’s money.It’s like throwing good money circa RM 400 million that could be better utlised elsewhere.
      We are rewarding inefficency and maybe corruption and mismanagement.

      Finally, why establish a small bank now and later to be taken by other banks in another round of merger?

    4. Talha Jamshaid says:

      This is a very informative article..I have made my effort in explaing the Islamic Investment

      Banks as need of the hour..The link is given below..

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