Malawi approves Islamic Banking, Sharia-compliant services
Malawi government has approved to embrace the Islamic banking system which doesn’t demand any interest from the borrowers as is the case with non-Islamic banking systems.
Registrar of Financial Institutions Dalitso Kabambe , who is also Reserve Bank Governor, says in the approval document seen by Nyasa Times that this will only be through “Window Model Only.”
“This shall entail banks offering Islamic (non-interest) Banking products alongside conventional banking facilities,” says Kabambe.
He says in this regard; bank supervisors will shortly be engaging with each bank to prove guidance on reporting requirements of Sharia-compliant products and services.
“Once developed, the guidelines will be shared with each bank,” says Kabambe.
The International Monetary Fund (IMF) said in its recent report that Islamic finance has potential to spur inclusive growth but calls for its proper regulation and supervision.
In relation to this, the Muslim Association of Malawi recently invited an expert in Islamic Finance that during the meeting facilitated by a South African Mufti Ismail Ebrahim Desai, a renowned scholar in Islamic Finance and Banking.
Key features of Islamic banking include a prohibition on interest, an emphasis on ethical standards that embrace moral and social values, and the overarching principle of fairness when handling liability and business risk. The system’s popularity in many North African and Middle Eastern countries stems from the less speculative nature of its products.
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This will not work in Malawi.Can anyone school me on how government will benefit from such banks.As far as am concerned government benefits a lot from these secular banks if i may call them such.To those who don’t know, if a bank makes a net profit of 1 billion,government takes 30% (ie.MK300 million as tax).Are the Islamic banks be remitting taxes when in operational.Am asking because by offering tax free loans that means palibe phindu lomwe adzipanga and ours is a very small economy to forgo taxes that this other banks pays.Ndiphunzitseni how Islamic banking operates,ine ndi mbuli pa nkhani imeneyi.Otherwise the government may approve it on paper but it won’t be practical. I doubt if this can happen in Malawi.
Choka Iwe Mzokoto, Your original Home Mzokoto is where Islam landed first before any other religion Malawi. So what t’s worrispme about Islam and its Economic System????? Kuzgobera Kurya Chuma cha “MARIKHO” through “INTEREST” eti????????????????????????????
kikikikikiki.
Surely this bank will be loved by both Muslims and none Muslims alike. They hate Islam because of prejudice and stereotype that stems from years of brainwashing that has led many none Muslims to start believing that Islam means war. The truth of the matter, however is that the whole world is waging war against Islam. Reasons- Because Islam strongly objects or rejects western values which are incompatible with Islamic teachings. A woman might wear a too revealing miniskirt and walks into the street without any problem actually she is seen as more progressive but when a Muslim lady wears hijabu and appears in public they are ridiculed and viewed as old fashioned, such is the strong influence of western culture upon the none Muslims. If Yusufu does something wrong the news that will follow will be that a Muslim has done so so so but if James does the same religious identity will not be mentioned such is the extent of their effort to subdue Islam. If book haram or al shababu kills Muslims, news account will only report the number of those killed without mentioning their religious identity, however if the victims are Christians then the headlines is that Christians are being killed wantonly by Muslims. Such is the extent of the international media that is bent on distorting information about Islam.
But no matter how hard they try they won’t succeed, actually the more they do it the more Islam grows from strength to strength. This Islamic bank is a clear testimony to that. The non Muslim world is, little by little, realising the priceless treasures of Islam!?
thanks for your heartedly openness
articulating ideas based on logical reasoning
Mayo ineeee! Malawi will become an islamic state and Sidik Mia will be its sharia law imposing imam. Kenako ISIS idzibwera mmbuyomo!
Thats what happens when ones brain is locked in a cabin. Thinking like below human capacity
yes mupsa tima zen zen simunati. even the world despite tarnishing the image of Islam has appreciated that the fastest growing religion in the world is Islam. tisakuwoneni mukubwela kuzabweleka dolla kuthawa ma interest anuwa anyani inu amene wasiya chipembezo chanu kma kusatila zmene mzungu wakuwuzan. nakha mu baibulo muli interest zoba?
Mzokoto, do not fear. Those working on this policy document are working very cautiously so that Christian sensibilities and fears are properly taken care of. Of course your fears are well founded because it is well known that our brothers and sisters in the Islamic World embrace a religious culture of hating and dismembering people of other faith other than Islam. That is why their institutions are “no gone zones” for those who they refer as infidels.
If you read very carefully the above electronic article sentence by sentence, you will figure out that Mr. Dalitso Kabambe has explained that the move to introduce Islamic Banking entails that banks offering Islamic Banking products with no interests should work alongside conventional banking facilities and that bank supervisors will be engaged with each bank to prove guidance on reporting requirements of Sharia Law based compliant products and services. What is deduced here, if correctly understood, is that possibly and very likely, current banking laws or legislation shall be amended so that they encompass Islamic Banking regulations. But in amending the regulations, it does not mean that a new bank specifically dealing in Islamic Banking would be allowed to be introduced in Malawi.
The policy is geared towards existing banks in Malawi. Doubts linger if any bank or a bank of the nature of HSBC which Mr. Yunus Jonas mentioned in his post could be allowed to operate in Malawi. HSBC bank has operated accounts of clients seeking to evade taxes and those involved in money laundering, financing terrorism and drugs and arms trafficking. The bombers of the hotel in Mumbai in India were discovered to have accessed funds from HSBC and that they originated from a predominantly Moslem country whose relation with India has ever been sour since the partition of India in 1947.
Thanks Government and thanks Reserve Bank of Malawi, mwapangabwino kuloleza Islamic Finance kuti anthu azipsya mtima, amene zikumuwawa akakolope lake Malawi.
What do Sharia-compliant services mean? The loans will be accompanied by application of Sharia -I guess. This one threatens me, honestly. In Christianity we teach love and forgiveness while Sharia (justice!) means hands and eyes off and stoning to death for offenders. I am not too excited with such banking services.
a gross misunderstanding kkkkk interpreting sharia according
to what george Bush said.
But i wonder what others uses their brains for
Next time think before you comment….
Mopiya, Sharia is truth, dont take it negatively, in banking its like when you borrow MK10,000.00 you will be able to pay back same amount NO INTERESTS…. INTERESTS IN ISLAM IS FORBIDDEN…. THAT IS ONE IMPORTANT OF SHARIA.
ALLAH AKBAR!!!
DO YOU KNOW WHAT??
Islamic banking and the finance industry is growing at an annual rate of 20%.nternational giant banks such as HSBC (HSBC Amanah), Citi Bank (Citi Islamic)and Standard Chartered have already established their Islamic units and functioning in the Middle East region.Recently it is reported that the largest state owned commercial bank, Bank of Ceylon Intends to commence its Islamic banking unit in early 2008. All these new entries imply that this alternative banking system has drawn the attention of Muslims as well as non-Muslims due to its unique developmental characteristics.The underlying principle of Islamic banks is the principle of justice which is an essential requirement for all kinds of Islamic financing. One of the unique and salient characteristics of Islamic banks is that the integration of ethical and moral values with its banking operation.Unlike the conventional banks, the financing of Islamic banks are restricted to useful goods and services and refrain from financing alcoholic beverages and tobacco or morally unacceptable services such as casinos and pornography, irrespective of whether or not such goods and services are legal or not in a given country.In contrast with conventional banks, Islamic banks do not consider only the creditworthiness and interest rate as standards; instead they must apply Islamic Moral/ethical criteria in their provision of financing.Another important characteristic which forms the basis for the development of Islamic banks is the relationship with depositors. Thus in Islamic banking industry,each bank will attempt to out-perform other banks if it wants to attract funds from investors.And the ultimate result is that a high return on investments for the investors, which is unlikely in a conventional bank where it deals with their depositors on a predetermined fixed interest rate.Furthermore Islamic banks eliminate the barrier between those who save and those who invest, and bring them closer to the real market.
Ma bank enawa ali m’madzi
You have only forgotten that, after that, they finance terrorism, oh yes, al-shabaab, al-quaeda, ISIS, boko harram, islamic magreb etc. Useless butchers of mankind. What morals are there if you follow medieval laws concocted by someone who married a nine year old, Aisha
You have rightly described them Phiri
Thinking like a Crocodile
Mr. Yusuf Jonas, from your profound argument you should know that Hong Kong and Shanghai Banking Corporation (HSBC) bank is the one which in the last six years alone before 2015 (see http://wolfstreet.com) has been accused of and/or has admitted to:
1. Rigging just about every financial market imaginable (from LIBOR and foreign exchange markets to gold, silver and oil).
2. “Misselling” wholly inappropriate products such as interest rate swaps to “unsophisticated” customers.
3. Laundering money for Mexican drug cartels. This included transporting billions of dollars in armored vehicles, clearing suspicious checks, and helping traffickers buy planes through Cayman Island.
4. Helping rogue states such as Iran and North Korea avoid international sanctions.
5. Working closely with Saudi Arabian banks linked to terrorist organizations.
That is just a sample of the crimes and misdemeanors that HSBC is known to have committed. Yet not a single senior executive has faced a single charge in court on a single one of them. Without beating about the bush, HSBC which was established in 1865 is the bank that has operated accounts of shady characters that sponsor terrorism. Historically, this bank is associated with drugs dating back to the opium wars against China.
In fact a bank scandal in Switzerland exposed HSBC Bank that it operated accounts of clients seeking to evade taxes and those involved in money laundering, financing terrorism and drugs and arms trafficking. The bank also allegedly opened accounts of leading politicians and members of ruling families from “corrupt countries”. A data leak in 2007 by a former employee of the bank in Geneva, revealed that the branch opened accounts for a gang in the United States of America (USA) and a drug dealer who transported 11 212 kilograms of cocaine. The leak, that had 30 000 accounts with total assets amounting to around $ 120 billion, was the biggest baking leak in history.
In France, Le Monde newspaper obtained a copy of the leaked document and shared it with other reputable media houses. On the other hand, the French government passed on details of clients at the bank who were evading taxes to other countries such as the UK, the USA, Argentina, Spain, Greece and Belgium.
All that happened because HSBC allowed clients to circumvent Swiss money laundering regulations. In fact, HSBC actively engaged in helping clients dodge taxes besides dealing with individuals involved is arms dealings and drug trafficking as well as “blood diamonds” dealing.
In India, the Financial Intelligence Unit of India (FIU–IND) tracked the diamond industry for suspicious activities by terrorists. It found that a great deal of money was being invested by terrorist groups. From the Far East to the Middle East, from America to India where the drug trade flourished, HSBC was there. It did not handle the dope but rather the cash, making sure that “citizens above suspicion” running the empire got their cut of the proceeds. HSBC has been caught red handed laundering money in USA, India, China and Argentina.
In USA, the bank exposed the USA financial system to illegal funds from Saudi Arabian terrorists, Mexican drug cartel and rogue regimes of North Korea and Cuba. Besides, the Senate accused the bank of helping slip billions of dollars in Iranian funds past American regulators. With September 9, 2001 twin towers destruction in New York fresh in the minds of American regulators, the Federal Reserve Bank ordered HSBC’s branches to clean up its act and make a better effort to keep criminals and terrorists from opening at its bank. The order came in April 2003. Though the bank has since 2011 changed its structure and method of operations while overhauling its banking business with new controls being implemented on cash withdrawals, it is far from certain that shady characters no longer use the bank as the bank went about cutting down its client base.
Malawi is currently locked with corruption and plunder of public funds. Criminal and corrupt activities are finding a niche in Malawi. Dubious characters furnish “impressive information” with the aim of getting bank loans worth of millions of Kwachas before disappearing without paying even a single tambala. Remember about the toxic loans that surfaced at the defunct Malawi Savings Bank (MSB) that surfaced under the management of a CEO who was non Christian. If shady characters have the impudence to circumvent Malawi banking laws, what more with a bank of the HSBC type that has assisted terrorists and flouted pretty much every law of every land without the slightest fear of sanction? This is a bank that would remove reference to name of a client in wire transaction, often putting itself in place of the actual client name to avoid triggering alerts. HSBC should not be allowed in Malawi. Instead the Reserve Bank of Malawi should initiate an amendment to current banking laws so that specific banks, say First Merchant Bank, serve clients transacting under religious regulations. In addition, legislation should be put in place so that no individual intending to transact under such religious baking regulations should be forced to convert to another faith as a condition to access a loan. It should be harram!!!
THats a good development for Malawi.
Ife achikhrisitu mwayi obwereka nawo ndalamazi tizakhala nawo?
Aliyense atha kusungisa kapena kubwereka posayang’ana chipembezo chachikulu ndikusatila ndondomekoyake kuti mukamasungitsa simumalandila interest komanso mukafuna ngongole pobweza palibe interest you just share profit in a prescribed manner likewise you share losses
That i do not understand, coz if you keep money in the bank it means the bank will have to make use of the money by lending to the borrowers at an interest to make the bank operations going on and managing the staff by paying them salaries and the like. So if the bank is not doing that where are they getting the money to pay their expenses. And where is the said profit coming from . Please ndichoseni umbuli wangawu sindikudziwa.
Let this alternative banking be in place to rattle the other multi-billion profit making banks which have left Malawians poorer than before independence. The other rules we will learn them as we go along as long as there is no hidden agenda of other terrorist groups coming to Malawi and start butchering us in broad day light.
No hidden agenda its pure banking. The rules of the game are very simple and straight.
u borrow money you pay back the borrowed plus share of profits made from the borrowed money.
If no profit at, cul, pay back the money u borrowed only and dont pay any interest or additional money
Hahahahaha ndiye kupanga share profit yomwe wapanga ndikupeleka interest zikusiyana pati??Thanks Kay bee wanditsegula mutu,lnterest charged in another way..Tell me what happens munthu akakanika kubwenza??
I think those that have approved this bank know better than you. You may have negative attitudes towards Islam, but know that it will perfectly serve Malawians regardless of one’s religion. I am just happy that the bank’s principles are in line with our financial status. Thanks
The secret is that you agree a monthly rental at the beginning so that it remains fixed even when the interest rates are changing. Thus the banks pegs the interest rates at a higher rate to come up with the rental, but this is not communicated to the customers. It is a bit expensive when the interest rates are not stable like in our country. And the facilities are given to big businesses which can not easily fail.
Here we go
take that the bank has started operating and has no any customer;
And 100 yous joined the bank aliyense wabwereka mita mita =total 100 million
bank will not charge interest koma ukamapanga phindu ndi mita yako bank izakhala ndi gawo ku phindu lako pamwamba pa 100 million yako,, Ukakhala sunapange phindu bank izangopereka byebye osaitanisa ndalama ya profit ie, uzabwenza 1 mita yokha….
Nde kuti from ur profit azizalipira antchito awo,
Ngati sunamvese ask again
Islamic banking is for all..except that u wont be required to pay interest however the business risks are shared between the bank and borrower
Islamic Banking operates like any other bank only that: In ISLAM, interest is regarded as prohibited as it hinders transfering of wealth from the rich to the poor. Therefore, any person is eligible to transact with the bank without paying or receiving interest. Ukabwereka 1 million samanena kuti uzabwenza ndi interest ayi. Koma umabwenza 1 mitayo ndi share ya phindu lomwe wapanga from the 1 mita
Read below
What is ‘Islamic Banking’
Islamic banking is a banking system that is based on the principles of Islamic law, also referred to as Shariah law, and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest by lenders and investors. Collecting interest or “riba” is not permitted under Islamic law.
How Do Islamic Banks Earn Money Without Using Interest?
In order to earn money without charging interest, Islamic banks use equity-participation systems. This means that if a bank loans money to a business, the business pays back the loan without interest, but it gives the bank a share in its profits. If the business defaults on the loan or does not earn any profits, the bank does not receive any profit either.
For example, in 1963, Egyptians formed an Islamic bank in Mit Ghmar. When the bank loaned money to businesses, it did so on a profit-sharing model. To reduce risk, the bank only approved about 40% of its business loan applications, but the default ratio was zero.