MUSCAT -- Meethaq, the pioneer of Islamic banking in Oman from Bank Muscat, has launched innovative Shari'a compliant savings and home finance products which have evoked good response. Sulaiman Al Harthy, Group General Manager, Islamic Banking, said: "Meethaq is proud to take the lead in launching a suite of banking products which combine traditional values with modernity and ensure the choice of staying true to one's values. Meethaq has adopted the best practices in Islamic banking and finance worldwide to combine a robust model which will protect customers and complement the Islamic banking industry.
"The Meethaq strategy is to attract customers through innovative Shari'a based products and services. The operations are managed by an experienced team, separate from conventional banking." Bank Muscat is the first commercial bank in Oman to receive CBO's approval and begin independent Islamic banking window operations as per the requirements of Islamic banking regulatory framework of CBO. The bank has invested in staff, systems and controls to ensure the service is delivered in a professional, segregated and fully Shari'a compliant manner. Meethaq delivers products and services to meet all financial needs of customers by ensuring true Partnership, Transparency and Trust. The Shari'a based Edikhar saving account is designed on the principles of 'Mudaraba' where the bank generates Shari'a based income with a pre-determined profit-sharing ratio for the customer by investing the money in Shari'a based instruments.
Profit is calculated on daily average balance with potential competitive returns. The Edikhar saving account helps Meethaq customers to keep up with the tradition of savings with the convenience and safety of a professional and understanding bank. Also, customers earn highly competitive profits on savings. The savings account is available for both individuals as well as corporates. The benefits include potential competitive returns, free debit card, cash withdrawal facility through the widespread nationwide ATMs, free monthly statement, 24/7 facility of Internet and mobile banking. Customers are not levied any penalty if balance falls below the minimum level. They can also make utility bill payment via various channels.
Distribution of profit to depositors will be made on periodical basis based on pre-announced profit-sharing ratios. Every product of Meethaq goes through a process of Shari'a compliance certification by the Shari'a Supervisory Board and Edhikar has been created in line with the guidelines of the Central Bank of Oman. An Edhikar account holder provides funds as 'Rabb-ul-maal' and Meethaq invests these funds as 'Mudarib' i.e the fund manager "Entrepreneur". Based on this relationship, the depositors and Meethaq become beneficiaries of the profit earned. When the joint investment pool earns profit, it is distributed in the pre-agreed ratio of depositors and Meethaq.
Profit from the pool of Shari'a compliant assets is calculated at the end of every month. Meethaq keeps a share of the profit as a Mudarib's share. The balance profit is distributed between the customers as per predetermined weightages. As the pioneer of Islamic banking in Oman, Meethaq has launched home financing which provides a sense of security and comfort. Al Bait home financing assures the right financial tools to fulfill the aspirations of a dream home. The Shari'a compliant financing is offered for up to 80 per cent of property value with tenure of up to 25 years. Competitive financing rates are offered as well as multipurpose financing for residential use.
Al Bait offers easy and convenient approval process. Omani individuals single or jointly receiving salaries above RO 249/- from government or above RO 499 from approved listed companies are eligible to apply for Al Bait home finance, which is based on diminishing 'Musharaka' where the relationship between Meethaq and the customer is that of co-owners in the property and not of lender-borrower. The initial financing provided by Meethaq is applied to acquire a share in the property and not to provide a loan. The customer's periodic payment is for acquiring Meethaq's share in the property, whereas portion of rental is for the customer's use of the property. These payments do not constitute a repayment of a loan with interest since it does not involve an exchange of cash for a greater amount of future cash.
Agreements to facilitate Al Bait home finance include diminishing 'Musharkah' agreement between Meethaq and customer and rental payments agreement between Meethaq and customer. Meethaq stands out for its independent Shari'a Supervisory Board, separate capital allocation from shareholders' money, unique risk management tools, complete fund segregation, separate books of account, core banking system which supports Islamic banking operations, stand-alone Islamic banking branches and proper profit distribution mechanism among investment account holders/depositors. The adoption of AAOIFI standards (Accounting & Auditing Organisation for Islamic Financial Institutions) distinguishes Meethaq Islamic banking practices in terms of standardisation of products and services.
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