Gulf African Bank and Safaricom are set to launch M-Sharia, a Sharia-compliant banking service through MPesa which will enable customers to open and operate M-Sharia bank accounts.
The M-Sharia platform will be rolled out by March 2018, targeting the bank’s retail and commercial divisions.
The M-Sharia platform is being developed by the two parties and will be guided by Sharia principles — not an interest based financing but profit sharing said Gulf Bank.
Islam forbids the charging of interest on credit as per the Islamic Sharia principles. Money is advanced on a joint ownership arrangement known as asset banking.
“We are targeting the market which has been left out (financially excluded) due to interest rate capping law or ethical aspects. If you borrow from these other platforms like M-Shwari, interest rate and compounding interest rates are very exorbitant, and a lot of people are shying away. We are coming to provide a solution to that segment both for Muslims and non-Muslims. This product will be guided by the Sharia principles,” said Abdullahi Adan, the bank’s head of consumer banking.
Retail customers will be able to borrow cash through their mobile phones from as little as KES 100 to KES 200,000, while merchants will have a chance to buy stocks by borrowing through that platform from KES 50,000 to KES 500,000.
The credit facility for the retail service will be thirty days, while that for merchants will be three months.