28 April 2016 – It’s been over a decade since some of South Africa’s leading commercial banks introduced Islamic Banking services but despite the progress, there are still numerous misconceptions about this alternate form of banking.
CEO of FNB Islamic Banking, Amman Muhammad says South Africa is one of many African countries that enable citizens to benefit from the unique benefits of Islamic financial services.
“Locally, we are seeing an increasing number of people showing interest in Islamic banking solutions for a range of needs. However, we need more education to dispel some of the myths and to clarify what Islamic finance is all about. This would open the door for many more people to tap into the benefits of this form of banking.”
Islamic banking vs conventional banking
The fundamental difference is that Islamic banking is strictly aligned with Islamic jurisprudence. Such principles are then applied consistently across all solutions, monitored by independent Islamic legal experts.
It’s available to everyone, not just Muslims
Due to the alignment with underlying Islamic principles, people often assume that non-Muslims cannot make use of Islamic banking product – this is not the case. Islamic banking solutions are available to both Muslim and non-Muslim people. In fact more non-Muslim South Africans are starting to make use of Islamic financial services.
Some of the ways consumers can use Islamic finance
Purchasing property: You choose the property you wish to purchase – the financial institution will do the normal affordability checks, purchase it after you qualify and prepare an agreement which allows you to take gradual ownership of over a term suitable to you.
Purchase a vehicle: Islamic vehicle financing comes with fixed repayments that allow you peace of mind and the contract is not impacted by movements in interest rate.
Transact, Save or Invest: You can transact, save or invest in a compliant manner and still enjoy all the benefits that are available through conventional banking.
Amman says there are clear benefits for using Islamic financial services and as consumers become more aware, we will see even greater take up of such Islamic solutions.