Industrial Development Bank To Ask For Islamic Banking License
The Industrial Development and Workers Bank of Egypt considers asking the Central Bank of Egypt (CBE) for a license to conduct Islamic banking transactions in the current period in order to meet the increasing demand on sharia-compliant banking services.
El-Sayed El-Kosayer, chairman of the bank, said a survey was conducted on a random sample of its customers in the field of small and medium enterprises (SMEs). The people surveyed said they wish the bank offers Islamic banking products especially Ijara (Islamic lease) and Istisna’a (product manufacturing contract with agreed delivery and price).
The increasing demand on such products has made many conventional banks which have Islamic banking licenses (11 banks in Egypt) expand in offering such products, El-Kosayer noted. The volume of Islamic deposits held by banks in Egypt reached about EGP 95 billion and the volume of Islamic banking finances reached EGP 65 billion, accounting for 7.5% of the total volume of banking deposits and finances in Egypt, according to the latest statistics.
The bank received CBE’s approval to inaugurate three new branches in Helwan, Quesna and Damanhour; one to be in 2012 and two in 2013. The bank plans to increase its branches to 20, in order to improve its branches network. El-Kosayer added that the bank considers converting two of its conventional branches to Islamic branches.
Some of the bank’s employees will be trained on Islamic banking, he said, adding that the bank may hire other employees who are experienced in conducting Islamic banking transactions if the demand increases. El-Kosayer, then, affirmed that the Islamic banking transactions will be supervised by an Islamic legal authority.
Many Islamic countries have both conventional and Islamic banks such as Kingdom of Saudi Arabia. Therefore, El-Kosayer called on CBE to allow both kinds of transactions to be conducted in order to meet all the requirements of customers.
The Islamic banking proved to be more resilient than conventional banks in the face of the global financial crisis. This made many non-Muslim countries license Islamic banking transactions. According to the latest statistics, about 820 banks in the world are offering Islamic banking services; of which 500 banks are Islamic and 320 banks are conventional but have Islamic windows in 60 countries, with volume of assets of about US$ 1.3 billion.
