Maldives second bank opens for business

Maldives’ second incorporated bank, (Maldives Islamic Bank) was inaugurated early this week on the auspicious anniversary of the day Maldives embraced Islam. MIB was inaugurated by the president of Maldives, Mohamed Nasheed.

The bank officially opened its doors for banking and financial services on Tuesday, 8 March 2011, and the early morning saw a huge number of customers waiting in a long queue, expecting to start up their respective accounts in the bank.

Ali Wasif, Planning and Development Officer of the bank explained to Maldives Traveller in detail the facilities and services provided by the bank, likewise to that of conventional banking services, but abiding to the Islamic Law & Shariah.

The three primal services MIB would provide include: Deposit Products (Current and Savings Accounts), Investment Products (General Investment Accounts (GIA), which is fixed depository in conventional banking), and Financial Products (SME and Corporate and Retail (consumer) Financing) all without any interests involved.

Under SME and Corporate Financial, products are; Working Capital Financing, Trade Financing, Contract Financing, Capital Goods/Equipment Financing, Project Financing, Bank Guarantee and Foreign Exchange. The bank will also provide Home and Vehicle Financing facilities without resorting to the interest generating strategy.

With their investment and financial facilities, the bank will invest in low risk business entities for their customers. “Service-wise, I would say that we are a business and that this would be one of the most profitable businesses yielding good returns. Our customers are indirectly investing their deposits in huge business and they would be returned with the profit depending on the weightage of their deposit.” explained Wasif about their services.

MIB will launch their ATM facilities within the next 3 months with one ATM machine inside the bank’s premises and 3 or 4 machines in various locations throughout Malé. Apart from providing financial services, the bank will also standardise their website and start facilities such as internet banking within the next six months.

“We haven’t been able to establish an international clearing system yet, which means we cannot participate in the international market which uses visa, master or MX card.

Because of our nature – that is abiding to Islamic laws – we cannot take part in any credit card facilities which involve interest base.” explained Wasif when asked about their plans on providing banking facilities to travellers. However, the bank will facilitate International money transfer.

But, the Bank is already in their development phase of debit card facilities which would hopefully be introduced within the next 1-2 years, according to Wasif.

The objective of MIB is to provide basic Islamic banking facilities and plan to expand their services throughout the country by the end of 2011, as in the initial year they would be concentrating on building a strong customer base.

Further, the bank will also participate in the Maldives Interoperable Payment System (MIPS) project undertaken by MMA which includes; Real Time Gross Settlement (RTGS), Automated Clearing House (ACH), Mobile Payment System (MPS) and also EFT Switch.

Islamic banking being a new system in the world is a continuously evolving and developing service.

 Since the system does not resort to any interest bases, similar instruments used within the conventional banking system which are beneficial to the customers, are modified according to the Islamic law.

MIB received the banking licence to conduct Islamic banking business from MMA on 2 August 2010.

In collaboration with ICD (Islamic Corporation for the Development of The Private Sector) who hold 85% share, the Government of Maldives (represented by the Ministry of Finance and Treasury), owns the balance share of 15%.