Maldives Islamic Bank introduces internet banking

The Maldives Islamic Bank (MIB) has introduced internet banking services to its customers on Thursday (March 12).

Maldives Monetary Authority (MMA) Governor Dr Azeema Adam inaugurated the ‘FaisaNet’ service at a ceremony at the Nasandhuraa Palace Hotel.

“The launching of our internet banking service would undoubtedly enhance the depth and quality of our services to our customers. From a broader perspective, it is our hope that it would also contribute to the development and modernization of the banking industry in Maldives generally,” said MIB Managing Director Harith Harun.

MIB explained in a press release that customers could register online for the services, which “enables them to check account balances, view and print statements, do account transfers, check clear cheque status, request for cheque book, check financing list and schedule transfers.”

“All of these services are available to customers with free registration and zero annual fee for Consumer Basic internet banking account type,” MIB said.

“In the near future, customers will also be able to make bill payments, Fithr Zakat payments, salary payments, and for business customers to request for Letter of Credit and Letter of Guarantee.”


Potential of Islamic finance yet to be fully explored in Maldives, suggests MMA governor

The scope and potential of Islamic finance, insurance, and banking in the Maldives is “yet to be fully explored”, suggests Maldives Monetary Authority (MMA) Governor Dr Azeema Adam.

Speaking at the opening ceremony of the first ‘Maldives Islamic Banking and Finance Industry Conference’ yesterday, Dr Azeema said Islamic finance “provides a springboard” to generate innovative ideas to cater to the financing needs of the domestic economy.

“The phenomenal growth of Islamic insurance and Islamic banking in the Maldives in the last few years suggest that there is still significant market to capture,” the central bank’s governor said in her keynote address at the conference.

“There is a need for financial institutions in the Maldives to strive to reach to every corner of the Maldives; every island in the country. There is a need to provide banking services to the unbanked,” said Azeema.

Islamic banking and capital market services were introduced in the Maldives in 2011, with the opening of the Maldives Islamic Bank (MIB).

Providing banking services to all inhabited islands “might not always be profitable,” Azeema continued, requiring innovation within the Maldivian financial sector.

“Financial products in the Maldives need to transcend the oceans and reach each and every person in the country, including those in the most isolated and remote islands.”

To support the growth of Islamic finance, Azeema recommended development of a “comprehensive legal and regulatory framework specific to Islamic finance”.

The MMA has formed a ‘Shariah Advisory Council’ to ensure Shariah compliance, she continued, while legislation on Islamic banking and Takaful has been drafted.

The governor expressed hope that laws on the “two key components of Islamic finance” could be enacted before the end of the year.

“Viable alternative”

Under Islamic Shariah, any risk-free or guaranteed rate of return on a loan or investment is considered riba (usury or interest), which is prohibited in Islam.

Conventional insurance is also prohibited in Islam because of forbidden elements such as riba.

Azeema observed that from a modest beginning in the 1970s Islamic finance was now a global industry with a total asset value of US$2 trillion.

At its current pace, the growth in Islamic finance stands sharply ahead of conventional finance which experienced significant de-leveraging and slowdown in the wake of the global financial crisis,” she noted.

“One of the reasons for the phenomenal growth of Islamic finance is the perception that it is more ethical, compared to conventional finance, which is traditionally viewed as predatory when needed.”

While the industry represented a niche market for Muslims, Azeema said it has since “transformed to a viable alternative for consumers of convention finance, irrespective of their religious beliefs.”

“The basic tenets of Islamic finance, like the idea of sharing profits and losses, investments only in ethically permissible areas, and the inseparable link of finance with real and productive economic activities, are understandably appealing to all,” she explained.

“It is this humane face that is required to encourage and reward those Maldivians who work hard. The individual and self-employed entrepreneurs who needs a financier to realise their dreams; the creative youth who need a bank to fund their ideas; the small and medium enterprises who need access to easy financing; and the large enterprises who need a wide range of investment and financial products.”

In addition to its ability to cater to the diverse groups in the Maldivian economy, Adam suggested Islamic finance could “bring about a more equitable society; a responsible and hardworking society; a society where individual creativity and free enterprise thrive.”

“Long journey”

The governor suggested that competition among financial products could help correct “market failures” and was welcome in the Maldives.

Islamic finance could also be “a reliable alternative source of funding” for investors, she added.

The introduction of Islamic finance has been “a long journey,” Azeema said.

While Amana Takaful started selling insurance in 2003, the Maldives Islamic Bank commenced operations in March 2011.

“The strong mobilisation of deposits that followed the commencement of MIB confirmed the latent demand for Islamic finance and the need for an institution offering Islamic financial services,” she observed.

Since 2011, she noted, housing finance based on Shariah principles have been made available while Allied Insurance was offering takaful products through their window named Ayady Takaful.

The Bank of Maldives has meanwhile been given approval to establish an Islamic banking window, she added.

“The development of an Islamic Capital Market has also been initiated with one listed Shari’ah compliant equity,” she said.

In March, Deputy Islamic Minister Dr Aishath Muneeza said that, in addition to the introduction of Islamic fund management this year, the government planned to “introduce an Islamic finance centre that will not only provide offshore Islamic financial services, but this centre will act as the Islamic finance hub for the whole South Asia region.”


Amana Takaful posts MVR 4.5 million profit since Maldives Stock Exchange float

Sharia-compliant insurance company Amana Takaful (Maldives) PLC has announced a cumulative profit of MVR 4.5 Million (US$292,208) since listing on the Maldives Stock Exchange back in 2011.

Following the company’s second annual general meeting held Sunday (April 28), Amana Takaful  said a 10 percent dividend of MVR 2.6 million (US$168,831) would be paid among its Maldives-based shareholder members for the group’s performance during 2012.

Growth for the company during last year was said to be driven in particular by demand for medical and motor insurance following amendments to government regulations that has seen a number of insurers moving to offer 3rd party coverage in these areas.

A spokesperson for the company claimed that 3rd party motor cover was anticipated to continue to help drive growth for its Maldives operations in the coming years as a result of recent legislation imposed on the country’s motorists.

During its AGM, Amana Takaful also announced an underwriting result – earnings from premiums after deducting the costs of operating expenses and insurance claims – of MVR 20.7 million (US$1.3 million). This was said to be a 61 percent increase on the previous year.

As well as Sharia-compliant insurance, a growing number of private groups in the Maldives have moved to offer Islamic financing to their customers.

Specialist groups such as the Maldives Islamic Bank (MIB) are set to be joined in the segment by Bank of Maldives (BML), which this month announced the appointment of a four-member Sharia Advisory Committee.


Maldives banks revising home finance to cater to emerging real estate demand

Two banking groups operating in the Maldives have announced the launch of new home financing mechanisms they have said will cater for predicted growth in the country’s real estate sector.

Both the Maldives Islamic Bank (MIB) and Bank of Maldives (BML) have launched new home finance packages in recent weeks to try and cater for a perceived emerging demand amongst local buyers.

MIB on Tuesday (February 5) officially launched a new mechanism for home financing based on the Islamic principle of “Diminishing Musharaka”.

A spokesperson for MIB explained that the principle required the formation of a partnership between itself and an individual customer or institution to jointly buy a property.

Once acquired, eligible customers enter an agreement with the bank to divide shares in the property into units.  These units must must then be periodically purchased by the client until ownership is fully transferred from MIB.

Properties covered by the financing program must be fully constructed and not more than 10 years old, while also found to have been kept in good condition in accordance to standards outlined by the bank.

The maximum financing available under the scheme was 80 percent of a property’s total purchase price, the bank added.  The maximum tenure of the loan – the time by which the customer is required to have fully paid back the financing to MIB – is 20 years.

According to the company, individual customers looking to make use of the finance scheme must be 21 years of age or above, while institutions must be registered in accordance to local laws.

Prior to the MIB launch, state-owned BML also announced a new home finance package for its customers that it claims offers more favourable loan conditions for the purchase or refinancing of properties specifically in the capital Male’ or the nearby island of Hulhumale’.

“Recently the Maldives has seen a rise in real estate business and this sector is expected to grow in coming years. To cater for this demand, BML launched a competitive home loan product,” a spokesperson for the company has claimed.

Despite being one of the country’s longest-serving providers of home finance, BML has claimed that its revised loan package was more attractive to local buyers, increasing the repayment period to 15 years from the previous 10.

The company added that the interest rate for the loan had also been cut to 11 percent, a .75 percentage point reduction on its previous housing finance package.  Meanwhile, customer equity has also been cut to 20 percent from 30 percent previously, the company added.