Mobile telecommunications company Safaricom and Gulf African Bank are set to launch a Sharia-compliant banking service through M-Pesa next year.
Kenya's Gulf African Bank is set to roll out a Sharia-compliant banking service
The platform will be rolled out in March next year.
The service will allow customers to open and operate M-Sharia bank accounts through while targeting the bank’s retail and merchant segments.
The bank's head of consumer banking, Abdullahi Adan, on Wednesday said the platform being developed by the two parties will not be an interest based financing but profit sharing — going by the Sharia principles.
“We are targeting the market which has been left out (financially excluded) due to interest rate capping law or ethical aspects. If you borrow from these other platforms like M-Shwari, interest rate and compounding interest rates are very exorbitant, and a lot of people are shying away. We are coming to provide a solution to that segment both for Muslims and non-Muslims. This product will be guided by the Sharia principles,” said Abduallhi.
Islam forbids the charging of interest on credit and money is advanced on a joint ownership arrangement known as asset banking.
Retail customers will be able to borrow cash through their mobile phones from as little as Sh100 to Sh200,000, while merchants will have a chance to buy stocks by borrowing through that platform from Sh50,000 to Sh500,000.
Those borrowing through retail service will be given a 30 day-tenor while merchants will be given three months.
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