Cooperative bank for personal financing

PETALING Bank Rakyat (Bank Kerjasama Rakyat Malaysia Bhd) generally falls under the jurisdiction of the Domestic Trade, Cooperatives and Consumerism Ministry.

This is because it is a co-operative bank and not a commercial bank, which falls under the purview of Bank Negara. It is one of the six development financial institutions (DFIs) in the country.

Bank Negara only looks into the accounts and financial management of Bank Rakyat while appointments of key officials come under the ministry.

Bank Rakyat has carved out a niche in the area of personal financing especially for civil servants.

It has a link with Angkatan Koperasi Kebangsaan Malaysia Bhd (Angkasa) that allows for repayments to be deducted directly from the salaries of civil servants.

“This reduces the risk of default and keeps its percentage of bad loans low. It also makes Bank Rakyat’s business model different. It focuses only on personal financing.

“It does not do any corporate lending or advisory services,” said the official.

DFIs are specialised financial institutions set up by the Government to develop and promote key sectors that are considered to be of strategic importance.

Besides Bank Rakyat, the other DFIs are Bank Simpanan Nasional, Export-Import Bank of Malaysia Bhd, SME Bank (to cater for small and medium enterprises), Bank Pembangunan Malaysia Bhd and Bank Pertanian Malaysia Bhd or Agrobank.

Among these, Bank Simpanan and Bank Rakyat are permitted to collect deposits from the public.

Bank Rakyat was set up in 1954 under the Cooperative Ordinance of 1948 (Cooperative Societies Act 1993) and was first based in Bukit Mertajam, Penang.