Wealth Mobilisation by Islamic Banks: The Malaysian Case

Sudin Haron and Badrul Hisham Kamaruddin

in Islamic Perspectives on Wealth Creation

Published by Edinburgh University Press

Published in print May 2005 | ISBN: 9780748621002
Published online March 2012 | e-ISBN: 9780748653096 | DOI:
Wealth Mobilisation by Islamic Banks: The Malaysian Case

Show Summary Details


Many criticisms have been made against the means of wealth mobilisation by conventional banks. For Kuran (1986), the interest used by conventional banks profits only certain sectors of the economy as it transfers wealth from the poor to the rich. While Islam encourages legitimate trade and commerce, hoarding is however prohibited and zakāh is imposed on unutilised wealth. In addition, while legal ownership is recognised as an individual right in the Muslim world, it is maintained that all ownership must be subject to moral obligations. In this context, Islamic banks are expected to be sensitive to the needs of the society, promote social welfare, establish funds for social development, and make contribution towards the poor and the needy. This chapter highlights the experience of two Islamic financial institutions in Malaysia, the Bank Keriasama Rakyat Malaysia Berhad (Bank Rakyat) and Bank Islam Malaysia Berhad (BIMB), in mobilising wealth. These two institutions were chosen due to their distinctive differences in operations, target customers and usage of the Shariāh principles. The chapter begins by providing an overview of Islamic banking in Malaysia. The section that follows elaborates on the history and development of the Bank Rakyat and BIMB, followed by a discussion on their deposit and lending activities. The last two sections of the chapter discuss other activities undertaken by the two institutions, and the issues and challenges they face.

Keywords: wealth mobilisation; conventional banks; zakāh; Bank Rakyat; Malaysia; Islamic financial institutions

Chapter.  8909 words. 

Subjects: Society and Culture

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.