Oromia International Bank (OIB), recently received accreditation from the National Bank of Ethiopia (NBE) to run interest-free banking (IFB) [Islamic banking]. Now they have officially launched the new program.On Wednesday December 25 , the bank and potential clients in the sector spoke about the new banking operation.NBE issued a directive to banks allowing them to provide the service using a separate window along with their other banking services. Oromia has become the first bank permitted to undertake the business. The State owned Commercial Bank of Ethiopia will be the next bank allowed to operate the IFB.Abi Sano, President of OIB, said that the Islamic banking business has commenced at 24 branches and out of this, 10 are in Addis Ababa . The financial sector in Ethiopia has been operating in the country for over a century but interest-free banking has never been practiced. This is despite the fact that it is popular, not only in Islamic countries, but in many parts of the world.For the next three months Oromia will focus on deposit mobilization. "But we can handle loan requests and other financing services, we plan to open five branches exclusively for IFB in Addis Ababa and expect to expand to other parts of the country," the bank president said. According to information obtained from OIB, the first IFB branch will open around Merkao in the near future.Within a week since the bank resumed the IFB service on December 16, 2013 , 450 depositors have registered under the new scheme, guided by Sharia rules. "Without any promotion this many clients came to get the new service, and when we aggressively create awareness, the number of clients, who use the Islamic banking scheme, will grow sharply," the president told journalists at the official ceremony held at Elilly Hotel .Oromia hopes to earn up to 17 million birr from the IFB pool of clients. The President explained the new program in detail at the launching ceremony.To commence the new scheme Oromia is attempting to develop trust and credibility with their new potential clients. The bank has disclosed that it has formed a Sharia advisory board that has three cleric members, established a separate ledger and financial reports, keeping all data separated, ensuring segregating of activities from their conventional banking.According to the OIB plan, during the first three months the bank will focus on the deposit mobilization and in the second phase it will begin accepting debt financing requests and entertain them based on the funds mobilized and the feasibility.OIB has currently formed a separate department that handles the new banking business which will be managed under Sharia rule. The officials of OIB stressed that the IFB service is open to anyone in the public who would like to have interest free banking service.The bank has considered some challenges to IFB, because it is new for the country. To solve the expected challenges the bank plans to undertake several awareness creation events in Addis and other towns. From now until June, the bank plans to expand the number of branches that will deliver IFB services to 60.Recently OIB has purchased the 13 storey SA building at a cost of 210 million birr to relocate its headquarters from the building ¬¬it currently rents – the ¬Biftu Building - in front of the Commerce College , around the National Theater .The bank, established by around 5,000 shareholders six years ago had previously acquired a compound around the Ministry of Health for the construction of its future headquarters. The bank bought a new building on Africa Avenue (Bole road) for its headquarters until it completes the construction of its future headquarters.OIB has 85 branches and plans to expand to 105 by the end of the fiscal year. According to the latest information, the paid up capital of the bank has reached 517 million birr and its assets are 4.2 billion birr . The deposit amount has also reached 3.3 billion birr and it has given two billion birr in loans for 1,800 clients.
Most Popular Stories
- Obama Administration Releases Proposal to Regulate For-Profit Colleges
- Elizabeth Vargas' Husband Marc Cohn Addresses Rumors
- Keurig Adds Peet's coffee, Alters Starbucks deal
- U.S. to Relinquish Gov't Control Over Internet
- Quiznos Files for Chapter 11
- SoCalGas Reaches Record Spend on Diversity Suppliers
- U.S. Consumer Sentiment Falls in Early March
- Vybz Kartel Convicted of Murder
- Koch Brothers Step up Anti-Obamacare Campaign
- Is Malaysian Airlines Flight 370 in Andaman Sea?