Jaiz Bank, Wema Bank, and SunTrust Bank have signed a Memorandum of Understanding (MoU) to secure a $50 million loan from Islamic Corporation for the Development of the Private Sector (ICD) for lending to small and medium scale business on profit sharing basis instead of the normal banking interest-based system. In the terms of the agreement, the three banks will get $20million, $20million and $10million respectively for lending purposes.
How does non-interest financing work ?
The non-interest financing is more supportive of businesses and there are no pressures of accumulated interests. Also, profit and loss sharing is a major pillar of Islamic banking which allows businesses enough time to thrive rather than being strangulated by interest payment burden.
ICD is a multilateral organization and a member of the Islamic Development Bank (IsDB) Group. Its authorized capital stands at $2.0 billion, of which $1.0 billion is available for subscription with its shareholders consist of the IDB, 52 member countries, and five public financial institutions.
Jaiz Bank obtained a Regional Operating Licence to operate as a Non-Interest Bank from the Central Bank of Nigeria on the 11th of November 2011 and began full operations as the first Non-Interest Bank in Nigeria on the 6th of January, 2012 with 3 branches located in Abuja FCT, Kaduna, and Kano. The bank is listed on the Nigerian Stock Exchange and closed at ₦0.85 in yesterday’s trading session.
SunTrust Bank is a privately held Commercial Bank licensed by the Central Bank of Nigeria in 2001 under the Banks and other Financial Institution Act.(BOFIA)
Wema Bank Plc provides commercial banking services. The Bank offers retail and corporate banking services, trade finance, treasury as well as foreign exchange operations. The share price closed at ₦0.93 in yesterday’s trading session on the Nigerian Stock Exchange.