IslamicFinance.de

Investors are showing increasing interest in offering Sharia-compliant financial services in the Kenyan market. The two Islamic banks, First Community and Gulf African Bank, last week said they had acquired regulatory licenses to roll out takaful — Islamic insurance covers. Business Daily spoke to Dr Hassan Anandwa, a scholar at the Thika College for Sharia and Islamic Studies, on the new products.
Conventional financial services involve earning or charging interest. The Islamic versions, however, prohibit interest earning which is called haram. Those that comply with the above condition are called halal.
Savings and current accounts are halal and so are commissions and fees charged on these and other services like money transfers.
Ordinary banks earn the bulk of their income from interest on loans. Instead of earning interest on loans, Islamic banks simply put a markup on the value of the loan a borrower is seeking. There are several ways of doing this. One, the bank and borrower enter into a joint investment funded largely by the bank.
The bank and the borrower share risk and profits from the investment and ownership tilts gradually to the borrower as the bank recovers the principal amount and the markup agreed between the parties from revenues collected.