Kenya Banker’s “CEO Chat” reveals need for consumer education on Islamic Banking

The kenya Bankers Association on Friday held 2018’s first “My Chat with a Bank CEO”, an online forum that allows consumers to directly engage with CEOs of banks and pose various questions. The chat was one of the three planned this quarter. The host of this edition was Gulf African Bank CEO Abdalla Abdulkhalik, with the major focus being Islamic Banking which is now 10 years in Kenya.

In responding to some of the questions answered, the CEO was keen to state that Islamic Banking is not exclusive to muslims and that it is in fact open to all. He further noted that these organizations do not charge any interest rates on loans as required by Sharia law. In acquisitions of assets, the bank and the customer will get into an agreement that allows for a partnership in the ownership of the asset.

Mr. Abdalla further deliberated on the opportunities Islamic Banking presents to SMEs. The banking institutions have a form of LPO financing governed by specific rules but one that allows SMEs to continue running their operations using ther advances offered by the banks against their receivables.

On the interest rate caps which came in place following the enactment of the banking amendment act, the CEO opined that there was need to repeal the law. “The intent of the banking amendment act is good. The goal was to protect borrowers but how the law was structured did not consider the elements that contribute to the piece of credit. It is our wish that the act be repealed and that the industry work together with National Treasury and Central Bank work towards supporting Kenyans,” he said in response to a query.

A key takeaway from the chat was the need for consumer education in terms of the possibilities presented by Islamic Banking while further deepening of the same in Kenya. The next Chat with a Bank CEO will take place on February 9th with Jamii Bora CEO Mr Sam Kimani who also serves as the chairman of the Nairobi Securities Exchange as the host. The conversation will revolve around start-up capital strategies.

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