I won’t be telling any secrets if I say our banks continue to make huge profits every year. And their important clients are pampered and well looked after. Many people still prefer not to invest their money as the banks advise them to do and conservative estimates are that there is at least SR15 billion being kept in inactive accounts.
Many of these account holders are elderly men and women and retired workers who want to play it safe and so they have decided not to invest their money as the banks suggest for fear of exposing themselves to the risk of interest and of making profits from transactions that might involve usury.
It is a method that benefits both parties. The banks, on the other hand, are spared the trouble of having to pay interest on these inactive amounts — interest which would allow the bank to direct more investment and make even bigger profits. It is an effort that costs banks nothing, yet allows them to make more money even if they decide to increase their annual contributions to charities.
In the end the real benefit goes to the big clients. An important client can secure a SR100 million loan by simply picking up the phone and talking to the bank management. An owner of a small business, however, has to try every available means to get an SR100,000 loan.
The justification given for such discriminatory treatment is that the first client is a very rich individual with a large sum deposited in the bank while the second may at any time cease to exist as a businessman since there is no guarantee his business will last.
My friend and colleague, Wael Wahib, has been writing for a long time and asking the following questions: When are we going to have Islamic banks in the Kingdom which provide high-quality service and match conventional banks in their strength and ability to expand? When are we going to join the group of 204 Islamic banks operating in seven Muslim and non-Muslim counties?
Until these questions are answered, there will be more inactive accounts and more profits for banks.
