Tropical Bank limited will by end of this year 2019 be able to offer Islamic Banking products according to officials from the bank
According to Dennis Kakeeto, the Executive Director, Tropical Bank, the bank started on the process to secure a licence from Bank of Uganda to offer Islamic Banking to its customers in January this year’s and is so far in its final stages.
“We shall have the license before the end of this year and start offering Islamic banking products to our customers,” he said.
Kakeeto was speaking to journalists shortly after the Annual Tropical Bank Customers Appreciation dinner hosted by the bank for its corporate and most royal customers at Hotel African last Friday
Islamic Banking is a system of banking that is done in line with the principles of the Shari’ah (Islamic law), and its practical application through the development of Islamic economics.
The core element of Islamic banking as opposed to the popular conventional banking is that commercial banks offer support to businesses at no interest rates. The basic ultimate goal for the parties in this trade is to equally share profits, losses, risks that accrue from the business.
Investments in arms, narcotics, alcohol and gambling among others are forbidden in Islamic banking.
Globally, Islamic Banking is growing at an average of 20% annually.
In 2016, the Financial Institutions Act 2004 was amended in 2016 to allow the establishment of fully fledged Islamic Financial Institutions and for existing Financial Institutions to offer Islamic Banking alongside their conventional banking services.
However, no bank is yet to get a licence to offer this kind of banking
According to Lujja Sulaiman, Manager Islamic Banking, Tropical Bank limited, Tropical Bank, operationalization of Islamic banking will be done under Tropi-Hijja Account (an interest free account) with Hijja product categorized into three services namely; (i) Depository savings services, (ii) Fund management services, and (iii) Hijja operations services.
“As a financial intermediary, Tropical Bank shall undertake Depository savings services and Fund management services. The bank shall leave Hijja operations management to other stakeholders who are directly involved in the Hijja line of business. Tropi-Hijja Accounts shall be immediately migrated to our Islamic Banking Window as soon as Islamic banking license is secured,” he stated