Sharia friendly bank to open 25 branches

An Islamic bank plans to open 25 branches throughout the country as it spreads its Sharia-oriented services to both Muslims and Christians.

Officials of Gulf African Bank of Kenya said within three months of its operation in Kenya, the institution had accumulated deposits amounting to Sh1.1 billion.

The bank’s chief executive, Najmul Hassan, speaking during a day’s seminar in Mombasa on Monday, said their services had been received well by Kenyans and this was the reasons why they had an expansion programme “to reach every corner of the country”.

“We came from Pakistan with this Sharia compliant banking system and we have been overwhelmed by the response from both Muslims and Christians,” he said.

Overwhelmed

He explained that to moralise its banking system the bank would adhere strictly to the principles of Sharia with ‘absolutely no compromise’.

“Gulf African Bank is recognised today as a leading Sharia compliant financial institution,” he said adding that its Sharia supervisory board was run by renowned Islamic scholars.

The bank’s activities according to the CEO were being monitored by the Central Bank of Kenya (CBK) and other institutions related to Islamic banking.

On the conventional banking system, Mr Hassan said this had impoverished many people due to its interest of making ‘huge profits’ from its clientele.

Demystify

To demystify banking, the chief executive said that Gulf African would not operate with the interest of using money as commodity to give ‘little’ and gain ‘more’ from its clientele.

“Money should be a medium of exchange with the sole aim of liberating humanity and creating wealth to the society,” he said.

Nominated MP Sheikh Mohamed Dor (ODM) said the banking industry should assist Kenyans to manage their money rather than exploiting them.

“How many people are being declared bankrupt because of not being able to pay their loans?” he posed, saying financial institutions should be flexible when dealing with their clients.

Sheikh Ali Shee, former Coast representative at the Bomas constitutional conference, decried what he said was the exploitation of clients by conventional banking saying it has not ‘liberated’ people from financial constraints.

Bank to launch more Islamic services

Kenya could soon have Sharia compliant bonds if proposals being prepared by the First Community Bank are accepted by the regulator.

“We are preparing proposals to be taken to the Central Bank of Kenya on introduction of Sharia bonds and we hope they will be in the market soon,” the bank’s chief executive officer, Mr Nathif Adam announced on Thursday.

He said the bank would also consider introducing Sharia compliant insurance (Takafol) in the future. Speaking during a seminar on Islamic banking organised by the Institute of Certified Public Accountants of Kenya, Mr Adam said the bonds called Sukuk, were among services the bank intended to introduce in the country.

He said First Community Bank has been overwhelmed by the number of clients who have opened accounts with the bank since it started operations about a month ago. Among them, he said, were religious organisations adding that so far, non-muslims constitute about 50 per cent of the accounts opened.

Mr Adam said it was impressive that Kenya was the first in east and central Africa to allow the establishment of Islamic banks, which are growing rapidly in other parts of the world.

Central Bank has also licensed Gulf African Bank along the same lines with a number of conventional banks introducing Sharia compliant products. Islamic Banks prohibit charging of interest, which they refer to as usury.

Tanzania and Uganda, Mr Adam said, had also showed interest in Islamic banks. The chief executive said First Community will officially open a new branch in Mombasa on Saturday to increase their branch network to three.

The other two are operating in Nairobi. “We intend to have not less than 17 branches in our second year of operation,” Mr Adam said.

Among those present during the seminar were commercial banks, savings and credit societies and power generating and telecommunications firms.