Bank Islam was the first Shariah based bank in Malaysia and South East Asia. The bank has been playing the leading role in developing Malaysia’s Islamic banking industry and has already provided technical assistance in setting up a few of the Islamic institutions in countries around Asian region such as Thailand, Indonesia and Sri Lanka. Islamic banking business is defined as a banking business with aims and operations that do not involve any element that is contrary to the Islamic religion. This business can be traced back to as early as before World War 2 when Muslims in Malaysia were already looking for an alternative financial system that will comply with the Shariah requirements. However, it was not until 1969 when the Pilgrims Management and Lembaga Urusan dan Tabung Haji or Fund Board was established. This was the first Islamic financial institutions in Malaysia during that time and its purpose was to encourage savings and investments among the Muslim community and also to help depositors to perform hajj.
Bank Islam was then established on 1st of July 1983 with the primary objective of assisting the financial needs of the Muslim community in Malaysia. The inception of Bank Islam was an effort of intense determination that was inspired by the Bumiputera Economic Congress that was held in 1980 and followed by Concept of Development in Islam that was held in 1981. The initiative was also coupled with the commitment and tireless effort that was put in by Tabung Haji and PERKIM, a non-governmental organization that is committed to taking care of the Muslim community’s welfare in Malaysia. Bank Islam was established with an RM500 million initial authorized capital and a paid in capital of RM79.9 million. Since then, Bank Islam has gradually increased the authorized paid up capital to RM2 billion and the paid in capital to RM563 million according to Wikipedia. Tun Dato’ Seri Dr Mahathir bin Mohamad, the former Prime Minister of Malaysia officiated the launch of Bank Islam and the official opening was also graced by YM Raja Tan Sri Mohar Raja Badiozaman, Bank Islam’s first Chairman and Dr. Abdul Halim Haji Ismail, Bank Islam’s first managing director.
During Bank Islam’s first year of operation, the bank only had 30 pioneer staffs and had to conduct its operations at a temporary headquarter located on the 1st floor of Kompleks Jemaah Haji in Subang, Selangor. Things went well and by the end of the first year, Bank Islam has already set up 4 operating branches in different states around Malaysia including Kuala Lumpur, Kuala Terengganu, Alor Setar and Kota Bahru and the total number of employees increased from 30 staffs to 272 staffs. Since then, Bank Islam has gradually extended its services to the non-Muslim community and came up with the Banking for All principle. However, in November 2005, Bank Islam reported a significant loss of RM480 million which was largely due to the non-performing loans from the Labuan’s offshore unit. Bank Islam did conduct an investigation on the loss but no other details were provided after that.
Today, there are more than 70 different types of innovative and sophisticated banking products and services that are based on Islamic principles offered by Bank Islam to the Muslim community and the non-Muslim community totalling more than 5 million customers. Bank Islam list of products and services range from savings, traditional financing to investment solutions that are exclusively catered to individual customers by fulfilling the fast-changing financial needs of modern day customers from all categories such as micro financing, capital market, wealth management and structured products.
In order to serve its customer base that is ever expanding, Bank Islam currently has 145 branches and more than 1,000 self-service terminals in Malaysia making it the widest dedicated Islamic Banking network in Malaysia. Bank Islam’s vision is to be the global leader in Islamic banking and it strives continuously provide the best service and catering to the different needs of customers.
As of this moment, the key people involved in Bank Islam are Dato’ Mohd Bakke Salleh as Chairman, Dato Sri Zukri Samat as managing director, Ustaz Dr. Ahmad as Syariah Chairman and Supervisory Council. Dubai Islamic Investment Group is also currently involved as they have taken a 40% stake in Bank Islam. Bank Islam’s headquarters is located on Level 32 of Menara Bank Islam in Kuala Lumpur.