Angy Essam listens in on what Egyptians have to say about Islamic banking Islamic banking transactions have been on offer in Egypt since the early 1970s, when Faisal Islamic bank was established. During the same era, the Central Bank of Egypt (CBE) gave conventional banks the green light to set up Islamic units. However, the demand on such banks was weak due to the limited services on offer. Another factor was the relatively low yield on investments and deposits, compared to conventional banks. Islamic banking was not customer-friendly in most cases. For Neama Ahmed, a housewife getting a low halal yield on her deposits is a luxury she cannot afford. "For me the most important factor is a regular guaranteed yield on my deposits, as it is my only source of income," said Ahmed. Retired physician Mahmoud Abdel-Nasser had a different problem with Islamic banks. "When I retired I made a request to transfer my pension to an Islamic bank. And it was the worst decision I have taken in my entire life," he said. Abdel-Nasser explained that the service was very poor, and that the system was complicated and disorganised. "So I decided to close my account and deal with another bank," he said. He was especially happy with the decision "after the grand mufti's declaration that commercial interest rates are not haram," or prohibited by Islam. This is now changing with Islamic branches in various banks in Cairo and beyond suddenly bustling with customers, encouraged by the rise of Islamists to power. With their rise has come a boom in the Islamic banking industry, as promised by Islamist parties' electoral agendas. For their part, the Salafist Nour Party has revealed its intention to open an Islamic bank of its own. And any visit to the Islamic branches of conventional banks, or to one of the two fully-fledged Islamic banks reveal an improvement in the organisation and services provided. Mohamed Abdel-Rahman, a marketing supervisor in one Islamic bank, explained that these banks offer the same products as those served by traditional banks, but with an Islamic twist. "There are current and saving accounts that are based on the Islamic principle of mudarba where customers and the bank share profits and losses as stipulated in the banking service agreement," he said. Retail banking services are also available, including services for cars, homes, hajj and omra travel, education and investment in equities. Also on offer are various types of Islamic insurance. For instance, advertising account manager Dina El-Gellani was looking to buy a car, but was hesitant to take a loan from a commercial bank as it is considered usury. "I recently made up my mind and decided to take a car loan from an Islamic bank that meets Islamic standards," said El-Gellani. She added that the terms for car financing in commercial banks may have been better, but the Islamic banking service was very good and considered halal. Abdel-Rahman also said that Islamic banks are currently expanding to provide services for the corporate sector. "We have business accounts, business deposits and business financing, where we are looking to fund new projects or expanding existing operations through profit and loss sharing, which is completely usury free," he said. Expanding in corporate-targeted services would help the likes of Mohamed Osman Islam, owner of a small import and export company. Islam dealt with an Islamic bank for four years. But had to leave it because the accounting standards his company follows made it necessary to determine the exact expected return on his deposits at the beginning of each year. "That was impossible, as in Islamic banks our deposits returns should not be determined previously," said Islam. The growth in annual profits of the sector by 11 per cent through last year was proof that the sector is gaining ground in Egypt, despite ongoing political turmoil. Growth was not only in profits but also in the size of their customer base, which has increased dramatically as compared to previous years. However, competition between Islamic and commercial banks is small. This is because a percentage of new Islamic bank customers have never dealt before with traditional banks, which they believe violate Islamic rules.
