Bank Rakyat Plans To Disburse RM45m Under Mikro-i

By Azlan Abu BakarPublished: 2009/04/28

BANK Kerjasama Rakyat Malaysia Bhd expects to disburse RM45 million worth of loans under its micro-financing scheme, Mikro-i, by year-end.

Backed by strong demand for such loans among small entrepreneurs, the country's largest cooperative bank has at end-February disbursed RM31.3 million since the scheme was introduced in April 2007.

"Although micro-finance is still considered a small segment in the bank, based on the growing demand from consumers, we expect to see it grow further in the near future," said Bank Rakyat general manager for consumer banking Yusof Abdul Rahman.

He said the bank aims to disburse loans to 4,500 small entrepreneurs to meet its target, from the 2,530 who have benefited from the scheme so far.

Yusof said the bank is optimistic of reaching the mark as it continues to boost clientele and embark on aggressive campaigns.

"Small- and medium-sized entrepreneurs represent a bulk of the business set-ups in the country. With the financing from Bank Rakyat, they are able to use the funding as capital to start or grow their business," he told Business Times in Kuala Lumpur recently.

Conditions set by the bank to get the loans are, however, different compared to other banks and financial institutions offering similar micro-finance schemes.

"The rule is they (entrepreneurs) need to move in a group of at least five people, are members of a cooperative, associated with the small traders association and have good financial records," Yusof said.

He said these entrepreneurs will be put under a group called Kumpulan Bantu Diri (KBD) or self assistance group, enabling them to grow a viable business and succeed.

Yusof said to date, there are 3,955 members comprising 708 groups under KBD.

About 53 per cent of the entrepreneurs are involved in retail, 34 per cent in the restaurant business while 10 per cent in canteen and food/drink outlets. The rest are either in wholesale or livestock.

To boost the micro-financing business, Bank Rakyat has embarked on aggressive promotional campaigns and increased the number of branches offering its scheme to customers throughout the country.

There were only five Bank Rakyat branches offering micro-financing in April 2007 but the numbers grew to 20 later in November in the same year.

"In 2008, we increased it to another 25, making the total number of branches offering micro-financing to 50 branches," he said.

The bank hopes that with the additional branches, it will be able to approve loans worth approximately RM4 million a month compared with only RM3 million previously.