NAIROBI, Kenya, Feb 2 – As evidence that Islamic banking is gaining firm root in Kenya, Barclays Bank of Kenya has introduced two more Sharia law compliant financing products.
The introduction of La Riba Personal Finance and La Riba Vehicle Finance products will see customers get financing of up to Sh1 million with no interest charges.
Barclays Bank Managing Director Adan Mohamed said on Tuesday that the demand for such products has been on the rise given the large Muslim community locked out of borrowing products due to conflict with their religion.
“Our Sharia board committee has been hand-holding us to make sure we do the right thing that does not conflict with the practice of financing and the Islamic faith,” Mr Mohamed said.
Both products are modeled around the Murabaha mode of financing which entails a cost plus profit. In this case, Barclays Bank will buy the goods customers may want, take possession of them and sell it to the customer at a higher price representing the cost plus profit.
“It is not a loan given on interest but sale of a commodity based on price and an agreed profit,” Mr Mohamed explained.
Customers can purchase goods worth a minimum of Sh50,000 and up to a maximum of Sh1 million. Barclays Premier Life and Barclays Premier customers can access goods worth Sh1.5 million and Sh4 million, respectively.
According to Mr Mohamed, both products are also open to non-Muslims and are accessible at all Barclays Bank branches. Barclays Kenya has partnered with Nakumatt Holdings, CMC and DT Dobie to offer their goods to customers.
Repayment is facilitated through a monthly standing order from the customer\’s source account. The repayment periods are flexible and up to five years.
While revealing the bank would be venturing into similar lending products, Mr Mohamed said they would take a cautionary approach, as there is still lack of sound policies governing Sharia Banking.
Industry players have in the past called on Central Bank of Kenya to set up a Central Sharia Supervisory Authority to oversee Islamic banking in Kenya.
Islamic banking remains a relatively green concept in Kenya with Gulf African and First Community being the only fully fledged Sharia Banks.