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Thailand Islamic Finance: Islamic Bank goes MLM to boost loans

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Bangkok: The state Islamic Bank of Thailand (IBank) has adopted a multi-layer marketing (MLM) strategy to help it achieve a target of at least 50,000 members by the end of this year.


Deputy Finance Minister Wirun Techapaiboon said IBank is the first bank in the country to adopt such a strategy to expand its customer base.


“Through this strategy, we could easily meet the 50,000-member target. We can even double that goal to 100,000 members by the end of this year,” said Mr. Viroon.


Dheerasak Suwanyos, president of IBank, said while the bank’s objective is to provide services under the rule of Islam, target customers can be from any religion.


With more customers to cater to, IBank would need to generate more income to cover the higher operating cost that comes with having more branches and employees.


“The MLM method is helping the bank comply with the [sharia] rules. It can expand the number of members that will help bring us more members to obtain our loans and the bank would offer net interest income in return to the members,” Mr. Wirun explained.


Currently, IBank’s operating cost is in a range of 7,000 to 15,000 baht per case depending on loan products. The MLM method will halve the cost to 7,000 baht per case.


Under the MLM programme, called IBank Family Member, eligible members must be 20 years old with a grade 12 or Mathayom 6 education. The entry fee is 500 baht and membership renewal costs 200 baht a year. Members will enjoy profit sharing from the loan products their teams have sold.


A team must have no more than four members including the team leader, who will gain 40% of net profit earned from each product. The second-level team member receives a cut of 30%, and 20% and 10% for lower levels, respectively.


If the team “sells” a 25-year mortgage, the interest income of the loan will be around 10%, which will be divided among all levels.


Currently, IBank has a network of 95 branches nationwide, to be expanded to 155 by the end of this year to serve the multiplying memberships.


The bank has launched the pilot MLM projects in five large provinces including Phuket and Chiang Mai, where they have won 5,000 members and 800 loan clients, with a combined loan value of 100 million baht.


(Courtesy: IINA.me)
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