KCB joins rush for Islamic banking with July launch
The Gulf African Bank is one of the two fully Islamic banks in Kenya. Other lenders have opened Islamic banking units. FILE
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KCB Islamic banking general manager Jaafar Abdulkadir said the bank has formed a Sharia Advisory Committee to regulate products and services in line with the law, with preparations for the rollout set to be completed in the next two months.
The bank will roll out the first phase at six centres — three in Mombasa at the Mvita, Kilindini and Mwembe Tayari branches and in Garissa, Wajir and Eastleigh.
KCB will roll out Islamic banking operations in Kenya by July, targeting areas with high Muslim population in the first phase of the plan.
KCB Islamic banking general manager Jaafar Abdulkadir said the bank has formed a Sharia Advisory Committee to regulate products and services in line with the law, with preparations for the rollout set to be completed in the next two months.
“We plan to launch five products in the first phase which will be up and running by July this year and then later on introduce more products in the fourth quarter of the year,” said Mr Abdulkadir.
The bank will roll out the first phase at six centres — three in Mombasa at the Mvita, Kilindini and Mwembe Tayari branches and in Garissa, Wajir and Eastleigh.
The process of setting up the unit, which is set to be the lender’s second in the region after that of its Tanzanian subsidiary, begun in September last year.
KCB is taking advantage of laws introduced by the Treasury, Central Bank, Capital Markets Authority and the Sacco Societies Regulatory Authority to allow banks and other financial institutions sell Islamic finance products.
Barclays Bank was the first to set up an Islamic banking unit in Kenya in 2005 through the La Riba current account.
National Bank last year also launched an Islamic banking window dubbed National Amanah, targeting retail, corporate and SME clients.
The Standard Chartered Bank has indicated plans to set up a similar unit through its Islamic banking brand, Standard Chartered Saadiq.
Stanchart global head of Islamic consumer banking Wasim Saifi in a visit to Kenya last year said Kenya would act as an entry point for the lender’s Islamic banking business in the region.
The two fully Islamic banks operating in Kenya — Gulf African Bank and First Community Bank — were licensed in 2008.
In addition to Islamic banking products, Sharia-compliant insurance services have been introduced in Kenya in the past two years through Takaful insurance.
In December 2013, the government licenced the first Sharia-compliant sacco in the country — Crescent Takaful Sacco Society Limited (CTS) — which runs front office operations such as deposit-taking and lending.
Deepening Islamic finance could help Kenya attract investment from cash-rich Islamic funds in the Gulf and Southeast Asia.
The Central Bank has also been taking steps to deepen Islamic banking by collaborating with the International Centre for Education in Islamic Finance (INCEIF) to design a certification programme for senior bank and sacco officials on the governance of Islamic transactions and products.
The course will be offered at the Kenya School of Monetary Studies.
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