Corporate News
A KCB banking hall. file
By MUGAMBI MUTEGI
The Treasury has extended a special exemption for Barclays Kenya that allows it to hold property in facilitation of its Islamic banking business.
The bank has been excused for another five years from
sections of the Banking Act that forbid commercial banks from holding
interest-earning assets such as land on behalf of their customers, as
happens in Sharia-compliant banking.
The exemption that Barclays received in 2010 --
when it launched La-Riba Vehicle Finance and La-Riba Personal Finance
products -- was coming to an end hence the extension from the Treasury.
“…the Cabinet Secretary for the National Treasury
exempts Barclays Bank of Kenya Limited from the provisions of section l2
(a) and 12 (c) of the Banking Act with respect to the La Riba Personal
Finance products for a period of five years with effect from the 1st
February, 2014,” said Henry Rotich, the Treasury secretary in a special
gazette notice.
Islam forbids earning of interest income, which has
seen lenders adopt a financing model for its Shariah banking where the
sale of a property is deferred and happens at cost plus an agreed profit
mark-up which the customer pays, for instance, through monthly standing
orders.
The Capital Market Authority is proposing to set up a regulatory for Islamic financial institutions.
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