14 April 2014
Muscat: alizz islamic bank has tasked itself with a plan to facilitate the financing of small and medium enterprises by introducing an streamlined process for financing the SME segment, according to a senior bank official.
"The concept of one size fits all does not work," says Mohamoud Barre Dualeh, head of product development at alizz islamic bank, who believes that the guidelines governing the financing of small- and medium-sized companies should be addressed in light of Central Bank of Oman's recommendation.
"The qualifications to finance a small or medium enterprise should not necessarily be the same as those for a corporate company," Dualeh told the Times of Oman in an interview.
"We know that conventional banks are providing finance for small and medium enterprises (SMEs), but with the introduction of Islamic banking, customers have the chance to choose between the products and services offered through traditional or conventional banking and Islamic banking."
The Sultanate's banking regulator, CBO, stipulated last year that commercial banks' financing to small and medium companies must account for at least five per cent of their total financing, in line with efforts to create more job opportunities and promote small business units. At present, SMEs are
receiving about two per cent of commercial finances.
"Our SME banking offers a wide array of financial products. The products cover the entire spectrum of solutions including those related to transaction accounts, deposit products, trade finance and financing products - offering a comprehensive suite of banking products," the alizz bank official said.
According to Dualeh, through the new scheme, the bank will classify companies as small and medium businesses and will then lay down a set of criteria based on their financial capability.
"A small company that has been running for a few years may not have all the financial background. They may not even have an accountant," he said, adding, "We are trying to introduce a risk-based model of credit-scoring system."
"The key dimensions of our SME banking are innovative products, competitive pricing, customer-focus and convenience, strong processes, and leveraging state-of-the-art technology to continuously provide high value and niche products to our customers. Cross-selling the entire SME product suite to our customers is a critical aspect of our strategy" he said.
The program will be specific in terms of the process and management, Dualeh noted, adding that the introduction of the "credit-scored financing programme" will translate into a quick decision-making process.
Robust processes
"alizz islamic bank has committed itself to providing the highest quality of service to the customer, enhancing the customer experience and providing timely resolution through robust processes and competent employees. We aim to achieve this through customisation of products, product innovation and customer segmentation."
Commenting on the advantages of Islamic banking, Dualeh said, "In conventional banking, basically the money itself is a commodity, while Islamic banking is trade-based or asset-based."
It conforms to the beliefs of many people as "we do not lend money per se," he added.
He also noted, "What we do is that we look at the finance and what the customer needs, then we
finance. Either we buy the asset or we lease the services. So, in fact we take part in the trade and the asset.
"For example, a small company needs to buy a piece of equipment. What we do is that we go through the requirement for that company and then decide whether we will finance or not. If we decide to finance, then we look at the equipment the company requires and we buy from the supplier and then sell the equipment through 'Murabaha' or lease it through 'Ijarah' to the customer."
Such a system definitely contributes to the growth of the economy, he added.
Dualeh also said that he sees a "promising and exciting future" for the Islamic banking industry.
"Islamic banking is currently one of the fastest growing segments of the financial market industry. It is playing an ever increasing role in the international financial system as an efficient and viable alternative and has the potential to transform into a dynamic, fast growing and competitive form of financial intermediation."
More awareness programmes should be developed to raise awareness about the industry, Dualeh concluded.
To get in touch with the reporter: elham@timesofoman.com
Muscat: alizz islamic bank has tasked itself with a plan to facilitate the financing of small and medium enterprises by introducing an streamlined process for financing the SME segment, according to a senior bank official.
"The concept of one size fits all does not work," says Mohamoud Barre Dualeh, head of product development at alizz islamic bank, who believes that the guidelines governing the financing of small- and medium-sized companies should be addressed in light of Central Bank of Oman's recommendation.
"The qualifications to finance a small or medium enterprise should not necessarily be the same as those for a corporate company," Dualeh told the Times of Oman in an interview.
"We know that conventional banks are providing finance for small and medium enterprises (SMEs), but with the introduction of Islamic banking, customers have the chance to choose between the products and services offered through traditional or conventional banking and Islamic banking."
The Sultanate's banking regulator, CBO, stipulated last year that commercial banks' financing to small and medium companies must account for at least five per cent of their total financing, in line with efforts to create more job opportunities and promote small business units. At present, SMEs are
receiving about two per cent of commercial finances.
"Our SME banking offers a wide array of financial products. The products cover the entire spectrum of solutions including those related to transaction accounts, deposit products, trade finance and financing products - offering a comprehensive suite of banking products," the alizz bank official said.
According to Dualeh, through the new scheme, the bank will classify companies as small and medium businesses and will then lay down a set of criteria based on their financial capability.
"A small company that has been running for a few years may not have all the financial background. They may not even have an accountant," he said, adding, "We are trying to introduce a risk-based model of credit-scoring system."
"The key dimensions of our SME banking are innovative products, competitive pricing, customer-focus and convenience, strong processes, and leveraging state-of-the-art technology to continuously provide high value and niche products to our customers. Cross-selling the entire SME product suite to our customers is a critical aspect of our strategy" he said.
The program will be specific in terms of the process and management, Dualeh noted, adding that the introduction of the "credit-scored financing programme" will translate into a quick decision-making process.
Robust processes
"alizz islamic bank has committed itself to providing the highest quality of service to the customer, enhancing the customer experience and providing timely resolution through robust processes and competent employees. We aim to achieve this through customisation of products, product innovation and customer segmentation."
Commenting on the advantages of Islamic banking, Dualeh said, "In conventional banking, basically the money itself is a commodity, while Islamic banking is trade-based or asset-based."
It conforms to the beliefs of many people as "we do not lend money per se," he added.
He also noted, "What we do is that we look at the finance and what the customer needs, then we
finance. Either we buy the asset or we lease the services. So, in fact we take part in the trade and the asset.
"For example, a small company needs to buy a piece of equipment. What we do is that we go through the requirement for that company and then decide whether we will finance or not. If we decide to finance, then we look at the equipment the company requires and we buy from the supplier and then sell the equipment through 'Murabaha' or lease it through 'Ijarah' to the customer."
Such a system definitely contributes to the growth of the economy, he added.
Dualeh also said that he sees a "promising and exciting future" for the Islamic banking industry.
"Islamic banking is currently one of the fastest growing segments of the financial market industry. It is playing an ever increasing role in the international financial system as an efficient and viable alternative and has the potential to transform into a dynamic, fast growing and competitive form of financial intermediation."
More awareness programmes should be developed to raise awareness about the industry, Dualeh concluded.
To get in touch with the reporter: elham@timesofoman.com
© Times of Oman 2014
