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Monday, 25 August 2008

Kenya: Islamic Bank Seeks Market Dominance

Source: The Nation (Nairobi)/by Amina Kibirige


A second Islamic bank has opened a branch in Mombasa in as many months setting the stage for fierce competition between the institutions which carry out business according to the Shariah law and the mainstream conventional bankers.
Gulf African Bank opened its branch today along Nkurumah Road following in the footsteps of First Community Bank whose offices are along Digo Road.

Speaking during the launch, Gulf African Bank chairman Suleiman Shahbal promised the Muslim community that the institution will stick to the Islamic Shariah principles in its transactions.
"We are coming to the market faced with a huge challenge ahead of us and accountability before God but we are committed and if we do not keep out promise in five years time, then we would have failed," he said.
Mr Shahbal promised that the bank was not out to do business in the name of religion "but live up to its principles".
Speaking during the same ceremony, the bank's Shariah Board Chairman Professor Mohammed Badamana urged employees to take customers' complaints seriously as they settle on the new market" in order to build credibility and ward off competition".
"Nairobi's challenges are different from those in Mombasa so take complaints on anything that is deemed not Shariah complaint seriously and work on it to build credibility as well as fight competition," he said.
Gulf African Bank was the first bank to open its doors to the Islamic shariah of doing business in January this year and now has five branches in Nairobi and Mombasa.
Besides being rooted in ethics, transparency and fairness, the bank would follow religious teachings of eliminating interest from financial transactions as well as keeping off investments in prohibited sectors such as alcohol, gambling, and pork industry.
According to the bank's CEO Mr Najmul Hassan, it will make its profit from pay transactions, renting products and services like accounts and ATMs.
"In any product, sharing of risks is the integral part of business and unlike in conventional banking where the risk is entirely on the customer, in Islamic banking, the risk is only subjected to your part of investment," said Mr Hassan.
He said the Islamic mortgage is centered on the bank buying a house and renting it to customers while they pay for it as opposed to loaning money on interest.


He said that the bank was accessible to both Muslims and non-Muslims adding that it planned to role out more branches regionally to Uganda, Mozambique, Tanzania and Djibouti in the near future.
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