A REVIEW OF ISLAMIC BANKING PRODUCTS OFFERED BY AGRO BANK BETWEEN 2008 AND 2012

Dr Muhammad Ridhwan Bin Ab. Aziz

Allah says:Is it ye that cause it to grow, or are We the causeSurah al-Waqiah (64)

ObjectiveThe objective of this paper is to explore and compare the Islamic banking products and services offered by the bank between 2008 and 2012 in order to analyze the differences, development and improvement of Islamic banking products and services offered by the bank within the time frame, as the current aims of the bank is to be a full Islamic bank by 2015.

Methodology of ResearchThe methodology of research in this paper is through document analysis, interviews with relevant Agro Banks officers and observation from pamphlets and website of the bank.

Background of Agro Bank

Agro Bank is an institution which provides financial and banking facilities. Agrobank gives utmost priority to the needs of customers by providing attractive products and services such as saving activities, banking services, loan facilities, insurance coverage and advisory services.

Products in 20081. Fund for Food (3F Loan)2. Bumiputera Industrial and Business Community Scheme (MPPB)3. Commercial Agriculture Graduate Entrepreneur Scheme (SUTKS)4. Youth Farmers Scheme-i

Products in 20121. Fund For Food (3F) 3F is a term loan facility provided as a working capital for the investment in food production, processing, warehousing /cold storage room facilities and marketingEligibility: Individual, Partnership, CompanyMalaysian-owned company (minimum ownership of 51%)Repayment Period: Maximum 10 yearsLoan AmountMinimum RM10,000 and maximum RM5.0 million or up to RM10.0 million

2. Agricultural Entrepreneur Loan Fund (DPUP)

A term loan facility specifically for Small Medium Enterprises (SME) involved in agricultural based activities which include production, processing, marketing and biotechnology activity.

Eligibility: Individual, Partnership, CompanyMalaysian-owned company (minimum ownership of 51%)Repayment Period: Maximum 10 yearsLoan AmountMinimum RM10,000 and maximum RM5.0 million or up to RM10.0 millionProject Eligibility: Subject to fund owner and the prescribed program

3. Skim Belia Tani-i / Skim Belia Niaga (SBT/SBN)

Open to youths carried out activities in agriculture and agro-based industryEligibility: Age below 40 yearsIndividual/partnership entrepreneurs limited to 2 members onlyWritten recommendation and support from the Youth and Sports MinistryFixed and working capitalFinancing Amount: Minimum RM5,000 up to RM50,000Repayment Period: Maximum 7 yearsLoan amount: RM5, 000 RM15, 000 (no guarantor)Loan amount RM15, 001 RM50, 000 (guarantor with fixed income of at least RM800 per month)Physical collateral are acceptable by Agrobank

ANALYSIS OF ISLAMIC BANKING PRODUCTS BETWEEN 2008 AND 2012

1. ContractBay Bithaman Ajil & Bay al-Innah

2. ProductVarious products are offered from time to time.

ConclusionAgro Bank needs to improve:1. Offer different contracts in fiqh muamalat such as al-Musaqat, al-Muzaraah, Bay al-Salam.2. Products innovation such as developing idle waqf lands in this country.