Islamic banks ready to support SMEs

In September, during the National Entrepreneurship Week, Islamic banks granted RM20b worth of financing access, says AIBIM acting ED


SMALL and medium enterprises (SMEs) are not fully utilising various solutions provided by Islamic banks due to a lack of awareness but it is a problem that can be addressed.

The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) acting ED Ratna Sha’erah Kamaludin said local SMEs are not fully utilising various solutions provided by Islamic banks despite credit availability.

“There will be no more talk that there’s no access to financing for SMEs because Islamic banks are ready to provide this financing platform,” she told The Malaysian Reserve recently.

“In September, during the National Entrepreneurship Week, Islamic banks granted RM20 billion worth of financing access. So, we welcome SMEs to come to Islamic banks and try to get accredited to this financing,” she added.

Ratna Sha’erah said based on a survey of its members in Kuala Lumpur and Selangor, about 10,000 SMEs received more than RM10 billion in funding.

This was a testament to the fact that some SMEs know about financing products offered by Islamic banks, she said.

The data was collected from 21 out of 26 member banks of AIBIM and covered the period of up to the third quarter of 2019.

AIBIM has 26 members comprising of 11 domestic banks, five development financial institutions and 10 locally incorporated foreign banks.

Ratna Sha’erah hopes more SMEs will come forward and meet the Islamic bankers for their financing needs.

“The solution is there, it’s just that they need to tell us what they want. If more SMEs come forward and talk about their business, Islamic banks would be able to provide good solutions for their business to grow,” she said.

In addition to various financing solutions given, Islamic banks also support the various SME funding measures announced in Budget 2020.

Meanwhile, AIBIM stated several Islamic financial institutions provide supply chain financing, also known as supplier finance.

Supply chain financing is a set of solutions that improves cashflow by allowing businesses to lengthen their payment terms to their suppliers while providing the option for their large and SME suppliers to get paid early.

“This is a very special product for SMEs to enable them to finance their business. What we want to emphasise to SMEs is there are options to choose either conventional or Islamic. It’s very competitive as the products are comprehensive,” said the AIBIM head.


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