Dashen Bank, the pioneer in commencing non-interest window operation in a separate brand, Sharik in 2018, announced that it would open nine full-fledged interest-free banking (IFB) branches in a view to enhancing its share in the blossoming market thereby financing more halal businesses. Dashen has so far opened three IFB dedicated branches in Adama, Dire Dawa and Dessie. Apart from the four branches that will be opened in Addis Ababa; plan set to establish additional five in different parts of the country until the end of the current Ethiopian fiscal year.
Approached by The Ethiopian Herald, Dashen's Corporate Interest Free Banking Department Director Feysel Abdu said that the bank has been hugely investing in branch network expansion and product diversification to boost its portfolio in Ethiopia's Islamic finance. According to Feysel, the bank has spent ample time to put in place meticulous preparation to establish IFB full-fledged branches that would operate all services of international Islamic banks. Noting that Dashen has been providing IFB service at window level in more than 424 branches, he stressed that the new move addressed the doubt some customers had about their deposits could mix with the conventional wing.
"We have been hugely investing in IFB windows core banking system and installed separate schemes for the conventional and interest-free operations thereby successfully deterring mixture of finance. Despite this, we understand that the interest for separate, dedicated service is still so enormous among our customers." The director pointed out that the bank has appointed a five-member Sharia Advisory Committee (SAC) so as to overseeing sharia compliance and boosting the confidence of customers in the IFB operation. SAC has also offered the board, management and customers of the bank various advisory functions. Under Sharik, the full-fledged branches have been offering various IFB products and services including Murabaha (Cost Plus Profit Financing, in which the seller and buyer agree to the cost and markup of an asset) for working capital, project financing, consumer financing and investment and capital goods financing.
The branches have also been providing Wadiah (deposit) and Qard (interest-free loan) products and are ready to launch Mudarabah (an arrangement to share the profit and loss with venture capital and skill) soon. "Dashen's IFB customer base has reached over 166,000 and the deposit in the scheme hit over 2.6 billion Birr during the end of August 2020," Feysel said, adding that the bank has been approving 1.4 billion Birr finance for halal business and investment projects thus far. The bank would consolidate its engagement in supporting projects that have been running in accordance with Sharia law.
According to the director, equal consideration has also been given to internet and mobile banking and Dashen has offered Hiba Gift Card, An-Nisa Women's Card and Sharik Card for IFB customers. Whilst the move materializes the bank's strategic goal of digitalization and keeps business growth, it would also ensure customer's satisfaction.