Since its inception globally, Islamic banking has been growing at a rate of 20% every year. Many international players are venturing into this multi-billion dollar sector by forming Islamic subsidiaries and units.
For instance, banks such as Citibank, Standard Chartered, and HSBC have formed Citi Islamic, Standard Chartered, and HSBC Amannah respectively in order to tap into this huge market space.
In Kenya, the popularization of Islamic products and services has come a long way since its introduction in 2008. The country is even planning to hold the first ever Halal exhibition in Sub-Saharan Africa this month. The event is going to have 300 exhibitors showcasing various Islamic products and services.
The goal of the expo is to provide a platform for industry players in the public and private sector offering Halal products and services to exchange views and opportunities as well as educate and demystify the concept.
Islamic banks shall not be left behind and they shall be at the expo showcasing their financial products and services. Presently, there are a number of Sharia compliant financial institutions in the country and the expo will take the opportunity to showcase various banks offering these services.
The industry players will aim to show how the banking sector has evolved to include Takaful (Islamic Insurance) and Islamic investment and equity firms. In addition, we now also have Sharia compliant Sacco’s (Savings and Credit Societies).
Why You Should Opt For Islamic Business Banking Financing Over Conventional Business Financing
Islamic business banking is an alternative approach to modern business banking that still remains consistent with Shari’ah law and Islamic economic guidelines utilizing the principle of halal. Today, Islamic business banking is not only reserved for Muslims but non-Muslims can also access its services.
Islamic business banking is similar to conventional business banking in one important aspect. It acts as an intermediary and trustee of other people’s money. It, however, differs on the basis of its depositors sharing in the profits and loss of the bank. The depositors become its customers and have limited ownership rights.
Therefore, for any project to be undertaken by the financier and a beneficiary, the profits and loss are shared by both parties, instead of the businessperson carrying the burden alone.
The principle states that any output from such a project should be fairly shared among the parties. You should consider Islamic business banking products especially when you want to finance your businesses as the terms and conditions are favorable compared to conventional banks.
Islamic business banking loans have less stringent requirements for your business to qualify for financing. The main advantage of financing from an Islamic bank is that there is a minimum focus on your creditworthiness.
Islamic banks are not overly concerned about a customer’s credit worthiness. Instead, their criteria is based on the viability of a business project, and its ability to repay the loan is relegated under profitability.
Islamic business banking should not only be viewed as a special type of banking because it is rapidly becoming mainstream with a wide range of products.
In addition, financing deals can be structured with a mix of traditional banking and Shari’ah compliant finance to better suit the needs of businesses. Therefore businesses can now enjoy a wide variety of products that are tailored for different levels of commerce.
With the current interest rate cap taking effect in the country, obtaining business loans from conventional banks is becoming a challenge. Islamic business banking is able to offer more diverse financing opportunities for entrepreneurs, investors, and even ordinary clients.
Islamic business banking is increasingly becoming a viable option for financing enterprises. Visit any Islamic finance institution to learn more about their business products.
What are your thoughts on financing your business through Islamic Business Banking? Share your comments below.
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