Alliance Islamic Bank (or the “Bank”) launched Malaysia’s first book on zakat microfinancing, titled “Zakat and Microfinance” that pioneers the productive distribution of zakat fund as microfinancing to empower asnaf (underprivileged) micro-entrepreneurs.
As the ultimate objective of zakat is to alleviate poverty, the book “Zakat and Microfinance” was borne out of the objective (niat) of promoting equitable development and financial inclusion of all categories of entrepreneurs. The utilisation of zakat funds for microfinancing to empower communities and progress asnaf micro-entrepreneurs out of poverty through business is a breakthrough concept. It pioneers Malaysia’s first social financing model that utilises zakat for microfinancing and is aligned with Bank Negara Malaysia’s Value-Based Intermediation (VBI) agenda, which promotes a socio and eco-centric banking model in furtherance of the intended outcomes of Shariah.
Alliance Islamic Bank consulted with various organisations and committees to obtain input on the permissibility of productively distributing zakat funds as microfinancing to asnaf micro-entrepreneurs. The extensive research was conducted in collaboration with subject-matter experts, Islamic Studies researchers specialising in social financing from Universiti Kebangsaan Malaysia and Pusat Pungutan Zakat – Majlis Agama Islam Wilayah Persekutuan.
The book discusses the principles of distributing zakat fund to asnaf micro-entrepreneurs as qard (repayment without profit). In addition to the concept of social microfinancing based on Shariah principles, the book outlines evidence and best practices shared by scholars, alongside a collection of legal and philosophical views.
En. Rizal IL-Ehzan bin Fadil Azim, Chief Executive Officer of Alliance Islamic Bank said, “We see the potential of using Islamic social funds such as zakat to help the asnaf community especially after the onset of the COVID-19 pandemic. Through this, we hope to better serve the community and create a greater social impact. The book and our upcoming pilot Zakat Microfinancing Programme lead the way in promoting financial inclusion by providing accessible funding to this segment.”
“We understand that asnaf micro-entrepreneurs have difficulties scaling their business due to limited access to financing and lack of business guidance. To help address these challenges, we have embedded training and peer support into the pilot Zakat Microfinancing Programme. By providing them an opportunity to grow their business professionally and with accountability, we support and partner asnaf micro-entrepreneurs in their progress towards financial resiliency, transforming them from a zakat recipient into a future zakat contributor,” added En. Rizal IL-Ehzan.
Members of the public who are keen to access the “Zakat and Microfinance” e-book can visit https://www.allianceislamicbank.com.my/
About Alliance Bank Malaysia Berhad
Alliance Bank Malaysia Berhad and its subsidiary, Alliance Islamic Bank Berhad, offers banking and financial solutions through its consumer, SME, corporate, commercial and Islamic banking, and stockbroking business. The Bank provides easy access to its broad base of customers throughout the country via multi-pronged delivery channels that include retail branches, Privilege Banking Centres, Business Centres, Investment Bank branches, and mobile and Internet banking.
About Alliance Islamic Bank Berhad
Alliance Islamic Bank Berhad (AIS) is a wholly-owned subsidiary of Alliance Bank Malaysia Berhad (Alliance Bank). It offers a wide complement of Shariah-compliant products and services for consumers and businesses. AIS is one of the few domestic Islamic banks with in-house capabilities to serve business clients with comprehensive corporate and capital markets solutions. AIS is an ardent promoter and supporter of initiatives that create a positive impact on business, the community, and the environment.
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