Dubai Islamic Bank launched on Wednesday the world's first Sharia-compliant personal liquidity solution and planned to offer as much as Dh2 billion financing.
The product called: 'Al Islami Salam Finance' is based on the Islamic financing structure of Salam, which is a sale contract whereby the bank pays the cash price in advance, and the customer agrees to deliver goods with certain specifications and quantity on agreed future dates.
The bank has allocated around Dh1 billion for the scheme and will double the amount, if needed, its chief executive Abdullah Ali Al Hamli said.
"This new product is mainly to provide cash for our customers. We will test the market and may invest as much as Dh2 billion," Al Hamli told reporters as the launch of the product.
He said that the new product would have a positive impact on the bank's profitability. The financing is available from Dh25,000 to Dh1 million for the bank customers.
"Al Islami Salam Finance represents a milestone in Islamic banking," Al Hamli said, adding: "It is set to revolutionize the future of Sharia-compliant banking in the region, and we are certain that it will prove extremely popular within our diverse customer base."
Dr Adnan Chilwan, Chief of Retail and Business Banking of the bank said: "Over the last few years, we have received feedback from our customers of a need for cash for various uses. In the absence of such a product, customers were compelled to approach conventional banks and seek conventional borrowing."
"Given this background, we were able to proactively identify a precise solution in the form of Salam, to highlight that we were able to identify Salam -- as an Islamic solution to provide cash as an advance purchase price for certain described commodity to our customers in a Sharia compliant manner."
"Our strategy during this year will be to enhance our range of products and expand our retail reach to provide our customers with a compelling value proposition," Dr Chilwan said.
Developed by the bank with the assistance of its subsidiary, Dar Al Sharia Legal & Financial Consultancy, and approved by the bank's Sharia Supervisory Board headed by Dr Hussain Hamed Hassan, Al Islami Salam Finance provides customers the opportunity to receive cash price in advance, for a commitment to deliver a certain described commodity to the bank on agreed future dates.
"The landmark product took some time to be developed by Dar Al Sharia in close liaison with DIB in a fully Sharia compliant manner and should complete the impressive array of innovative products in DIB's shelf.
"The Salam product is the natural fit for people needing upfront cash payment and is based on a fixed price sale contract whereby the customer gets full price as cash down payment and delivers goods on deferred basis," Dar Al Shariah Chief Executive Officer Sohail Zubairi told Khaleej Times on the sideline of the product launch.
Source : Khaleej Times