FDH Bank plc has described its Salama banking or Islamic banking experience as phenomenal one year after introducing the product on the market, targeting people that prefer Shariah-compliance banking solutions.
The bank’s head of corporate banking Kawawa Msapato said this on Friday in Lilongwe during a business breakfast that the Malawi Stock Exchange-listed bank convened to interact with Salama banking customers and appreciate their feedback.
Said Msapato: “We have just clocked a year and we thought of engaging with our clients in Lilongwe so that we can get more feedback in terms of our offerings, what has been the experience, what more can we bring on the table and how can we diversify the product offering, among others.”
He said the Islamic window has registered thousands of customers and the transactions are in billions of kwachas, such that this month, it is being extended from three branches of Limbe, Mangochi and Lilongwe to all the branches nationwide.
“Being something that is new on the market, obviously we had done our research and seen that there was a need to bridge the gap. But still, when you launch, you are not sure what will be the reaction of your customers,” said Msapato.
In his remarks Chavah Advisory Committee for FDH Salama chairperson Sheikh Ibrahim Lethome described the experience as exciting, but highlighted the need for training of human resource to ensure that bank staff have relevant knowledge on Islamic banking.
He said: “We need more legal reforms to support the sector because remember we need to have laws that when there is a dispute within Islamic banking transactions, we should be able to resolve them.
“There is a need for training and also the need for people who have been trained in Islamic banking to support it.”
Lethome, a Kenyan, said if local banks can utilise such Islamic banking window, a full-fledged Islamic bank could be introduced in the country.
He said Kenya has three islamic banks that are thriving.
Chamber for Small and Medium Businesses Association executive secretary James Chiutsi said in an interview that the Islamimc banking window could not have come at a better time than now when the cost of capital is high.
“For years, we have decried high interest rates which have made borrowing from financial institutions very hard,” he said.
Reserve Bank of Malawi executive director for regulation Patrick Mhango said it is the government’s policy position to create a conducive business environment for the private sector to expand the scope of the country’s Islamic finance.
“As part of our legislative readiness, we will ensure that Islamic banking products are offered in a safe and sound manner,” he said.
Muslim Association of Malawi general secretary Sheikh Alhaj Twaibu Lawe thanked FDH Bank plc for their partnership to introduce Islamic banking, saying it will help them access bank services in an Islamic way.
Economic statistician Alick Nyasulu is quoted as having said that aspects of Islamic banking are worth pursuing given the high cost of borrowing, but it is not as easy as it seems.
Islamic banking, also referred to as Islamic finance, is premised on two fundamental principles of Islamic banking, which entails sharing of profit and loss and the prohibition of the collection and payment of interest by lenders and investors.
Elsewhere in Africa, South Africa, Nigeria, Kenya, Senegal, Djibouti, Uganda and Morocco have legal and regulatory frameworks and run Islamic finance products.
Meanwhile, a committee member of the FDH Islamic banking window Dalmin Omar Idruss said the product should not be attached to Islam as a religion.
