With both the value of the SME and the Islamic finance sectors predicted to
skyrocket over the next few years, it's not surprising that the two have
successfully intertwined in the GCC region. Isla MacFarlane reviews the most
recent offerings for Shari'ah-compliant SME financing.
SME financing could be deemed a natural fit for Islamic finance, by virtue of
the fact that it deals directly with the real economy; creates employment;
involves the productive use of resources; and contributes directly toward the
alleviation of poverty. Seeming to take to heart the criticisms of a few years
ago about Islamic financial institutions being too focused on corporate and high
net worth individuals, Islamic banks now appear to have cottoned on to the
potential of the SME market with more Shari'ah-compliant offerings coming onto
the market.
Last year saw more Islamic banks trying to corner the growing SME market,
with Abu Dhabi Islamic Bank launching a new Shari'ah-compliant covered card for
SMEs, and Noor Islamic Bank debuting a profiling and rating service, which gives
credibility to customers who do not have credit profiles or balance sheets.
ADIB explained that a covered card is the Shari'ah-compliant equivalent to a
credit card. Offered in Platinum and Gold versions, the Visa card provides SME
customers with a line of finance up to AED $250,000 ($68,066). The card also
provides SMEs with a payment tool that can help them control their expenditures,
improve their accounting management and access their funds more
conveniently.
Cardholders can use the cards as a substitute for less efficient and more
risky cash and cheques.
ADIB said that the introduction of the card is in line with ADIB's commitment
to develop SMEs in the UAE and also with the bank's strategy that aims to
provide tailored solutions to the business community at large.
Saif Ali Al Shuraifi, an ADIB customer, said, "As an SME owner, I have been
missing a practical solution like this that would help me manage my business
better. Having access to extra liquidity is an important factor in managing my
business successfully. Sometimes you have to cope with unplanned expenses and
this can be challenging, particularly in the current economic environment."
The Business Banking Division at ADIB - ADIB Business - is another of the
bank's initiatives created to offer banking services for the SME sector in the
UAE. The bank has pledged that new products and services will be offered to the
SME sector. According to ADIB, last year there was a lack of Shari'ah-compliant
products designed to meet the needs of SMEs, and the launch of the covered card
was its contribution to bridging the gap.
- HalalMedia.my |