JEDDAH, 9 July — The National Commercial Bank yesterday launched a new Shariah-compatible product which it said would enable a large segment of its client base to obtain cash for immediate personal use without resorting to conventional means.
Under the scheme, known as NCB Tayseer, the bank will sell a client goods it stocks and will help him to sell them in the international market in return for cash. The transaction is completed within 24 hours at a low cost to the client and by avoiding loss resulting from price fluctuations, senior NCB officials told a press conference here.
“This service is the first of its kind not only in the Kingdom but in the whole world. It satisfies the needs of a large segment of our clients who have been looking for an Islamic means of retrieving cash for immediate use. It is intended to save the client both time and money without compromising his commitment to Islamic principles,” said Abdul Raziq Al-Khuraiji, manager for Islamic Banking Services.
The goods involved cover almost anything traded internationally with the exception of gold and silver which according to Islamic law of business transactions should be traded directly between the seller and buyer.
NCB General Manager Abdul Hadi Shaif said the product is a major step in NCB’s effort to develop and expand Islamic banking services. The service adds to the bank’s 16 Islamic investment and financing products with assets totaling more than SR14 billion.
The largest of these is the low risk, high liquidity Saudi Riyal Trade Fund (SRTF) which purchases goods and sells them at mark-up on deferred payment terms. According to Shaif, it is the largest of its kind in the world with SR8 billion in investment.
Shaif spoke of a bright future awaiting Islamic banking throughout the world saying although the system is only two decades old it has made great strides. The NCB is the second largest bank in the Kingdom in terms of volume of Islamic banking transactions.
NCB Tayseer targets public and private sector employees seeking cash to meet immediate needs. The minimum monthly salary for clients to qualify for the service is SR4,000. It is open to Saudi as well as non-Saudi employees.
Al-Khuraiji said the second phase of the product would target small and medium businesses in an effort by the bank to encourage small investors and revive the sector, which forms the bulk of the business activity in the Kingdom.
The bank’s Islamic financing services apply a variety of mechanisms including murabaha (profit and loss sharing system), musharaka (profit-sharing joint venture), mudaraba (profit-sharing agreement), istisna (supplying industrial products to client’s orders) and ijara (a globally recognized mode of lease) in addition to numerous funds and portfolios.
