CAIRO: Egypt's National Bank for Development (NDB), in collaboration with Abu Dhabi Islamic Bank (ADIB), launched a new Sharia-compliant service that can help customers finance their education or travels with up to LE 150,000 and LE 200,000, respectively. NDB launched Ijara Services, which hopes to cater to new clients who are in need of a wider range of Islamic finance products. “These Ijara finance services are very rare in Egypt's market and offered by a limited number of banks in Egypt, topped by NBD and accordingly, this new product Ijara Service Finance will increase the bank's competitiveness in the Egyptian banking market,” said Nevine Loutfy, NBD managing director and CEO. “The new innovative product to finance Ijara education and travel services reflects NBD's banking policy, which is based on diversity in providing a range of banking products in order to expand its customer base and attract new customer segments,” she added. The service, which is a lease contract, allows the bank to lease to a customer a specific service to “exist in the future,” like education or travel, for a certain period of time with a set number of regular installments. Ijara can either be provided from the bank or a service provider like a school, university, or travel company through a signed parallel lease agreement. “This is quite achievable by providing our best practical banking solutions according to Islamic Sharia principles, to finance vital services to the market, such as education and travel, especially Hajj and Umrah trips,” said Loutfy in a statement. If a student wishes to use the Sharia-compliant payment system, they can apply for the Ijara Education Finance, which is via Al Nour Program. NBD then leases the education service that includes tuition and book fees, whether it is for a private university or school that the bank already has established an agreement with. Leased to the customer depending on their request, the customer can finance their education up to LE 150,000 in exchange for equal monthly installments over a period of up to 60 months. Moreover, the travel finance program can allow travelers, such as Muslim clients wishing to go to Hajj or Umrah, to borrow a maximum of LE 200,000 in order to finance their trips. This amount would also be paid back in equal monthly payments over an extended finance period of 60 months. Ijara, however, is not NBD's only Sharia-compliant service. The bank currently has a Sharia-compliant savings account where a percentage of the deposited funds are invested on the absolute “Mudarabah” basis, which is one of the financing methods that Sharia dictates, according to the bank. The account is available in several currencies, allows users to have a debit MasterCard, and is offered to Egyptians as well as foreign residents. Profit calculation for the account is of course, compatible with the Islamic finance system. Losses and profits are calculated based on the lowest credit balance during each month and are also capitalized semi-annually for both foreign and local currency savings accounts. The bank also offers an Islamic-compatible system that allows customers to finance their auto purchases though the Sharia-compliant finance method, Murabaha. According to NBD, Islamic financing helped Islamic banks evade the banking crisis of 2008 that heavily slammed banks in the United States, Europe, and Asia-major who offered loans that “exceeded the value of deposits-as well as margin selling,” otherwise known as derivatives. One of the main factors contributing to the crisis was the mortgage dilemma that initially emerged in the USA, which caused thousands of borrowers to default on their loans, miss their payments, and thus lose their homes. NBD was initially founded as a commercial bank in June 1980 with a starting capital of LE 50 million. Towards the end of 2007, ADIB, which strictly operates under Sharia principles, acquired a major stake of 49 percent in the bank. By cooperating with ADIB, NBD has been moving towards becoming an all-out Sharia-compliant bank capable to compete in the Egyptian market. Currently, NBD has over 70 branches, 2,000 employees and about 250,000 retail customers across Egypt.
