Nib International Bank S.C has already launched Interest Free Window Service deposit and financing products within its existing branches.
- Deposit and Investment Products
NIB has already introduced four Interest Free deposit and investment products: such as Wadiah Amanah (Safekeeping Saving Account), Qard (Current Account), Mudarabah (profit/loss Sharing) saving account and Mudarabah fixed time deposit.
Wadiah Amanah (Safekeeping deposit)
This type of account is a trust agreement where the Bank keeps funds of depositors who want to place their funds under safe custody without any benefit. It is opened by customers for unspecified period of time for the purpose of safekeeping. Depositors give their consent to the Bank to deal with the whole or any part of their money in the manner that it deems fit, so long as it is not against Sha’riah. The Bank will guarantee payment of the principal as demanded by the customer.
- Valid ID card i.e. driver’s license, military ID, kebele ID card, passport, resident permit (for foreigners) and employing organization’s ID
- The ID cards should be renewed
- Two recent passport size photographs
Qard (Current account)
Qard account is opened for unspecified period and operated by checks like the conventional current account. The bank shall guarantee payment of the principal amount if the customer demanded.
- Valid and renewed ID card of the authorized signatories to operate the account.
- Renewed trade license and Registration certificate)
- Certificate of tax identification number (TIN)
- Original application letter and photocopies of all relevant documents should be retained in the mandate file.
- Memorandum and Articles of Association (if PLC, S.C. etc)
- initial deposit to open such account is Birr 1,000.00 (Birr one thousand only) for companies, associations and enterprises, etc and Birr 500.00 (Birr five hundred only) for individual(s);
Mudharabah Investment Saving Account (profit/loss sharing saving account)
This is an investment account where customer deposits money for unspecified period of time and he/she will share both the profit and loss based on the pre agreed ratio after deploying the fund in any permissible activities chosen by the bank. The customer may withdraw his/her deposit at any time, but the Bank may impose restrictions on withdrawal during specified period based on prior agreement.
- Depositors save their money for the benefit of profit sharing for undefined time;
- Profit rate to be paid is determined based on the banks performance during the profit payment period;
- The account is opened with zero profit sharing margin but periodically the bank notifies the percentage of profit share to be paid to the depositors account and credit the account;
- The required minimum initial deposit balance to open the account and to eligible for profit sharing for any profit distribution period is Birr 500.00 (Five Hundred only);
- If the Bank suffers losses in its business ventures, the loss will be compensated to depositor or investor using reserve accounts;
- If the reserve couldn’t cover the loss, it will entirely be borne by the depositor/investor (unless there is evidence of gross negligence on the part of the Bank);
- Account that short fall of the minimum deposit requirement, during Profit Payment Period, shall not be eligible for profit sharing;
- Customers are allowed to withdraw, from their credit balance, without any restriction/limitation as to its amount and timing;
- Account operation shall be through the use of formats prepared for this purpose;
- There will be no service charge in relation to operating such account. However, there could be service charges if transaction is effected via ATM, POS or other cash dispensing outlets, passbook changes and other cost recovery activities.
Mudarabah Fixed Time Deposit
- It is similar with the Mudarabah Saving, but the time deposit is opened for a limited period (term);
- Profit sharing margin can be variable among customers based on duration and volume of their deposit;
- A Certificate of Mudarabah Time Deposit (CMTD) is given to the depositor;
- The required minimum initial deposit to open this type of deposit and to eligible for profit sharing is Birr 5000.00 (Five Thousand only);
- Depositors shall not participate in the management of the investment of the funds;
- The costs of managing each of the Investment Fund (such as employees’ salaries) will be borne by the Bank (the Mudarib).
- Based on the customers’ request specified in the Mudarabah deposit opening contract, Mudarabah Fixed Time deposit can be automatically revolved for the same period.
- With regard to deposit duration there are three options:
- Mudarabah 3 months Fixed Term Deposit;
- Mudarabah 6 months Fixed Term Deposit; and
- Mudarabah 12 months Fixed Term Deposit.
- Profit is calculated on the deposit monthly, but credited to the depositors’ account on or after maturity of each deposit contract (s).
- Financing products
This service consists of Murabahah, Salam, Istisna and Iiara financing products. By making use of these a customer can obtain finance for:
Purchase of goods/assets;
Export and import trade;
Working Capital for agricultural activities
Murabahah (Cost Plus profit) mode of financing
Murabahah is a contract of sale between a customer and a bank in which a bank purchases the goods needed by a customer and sells the goods to the customer on a cost-plus basis. Both the profit (make-up) and the time of payment (usually in installment) are specified in an initial contract. The bank is the owner of the goods before it sells it to the customer. The bank may require collateral from the customers to secure the finance.
Among the services included in Murabahah are the following;
- Murabahah Term Financing- For purchase of inputs, machinery or short-term project financing;
- Murabahah Revolving Financing Facility-for purchase of inputs;
- Murabahah LC Financing-For purchase of inputs and machinery from abroad.
- Murabahah pre-shipment and Murabahah post-shipment Financing-For the purchase of goods to be exported.
Specific Requirements for Exporters
- Export plan by type and quantity
- Export sales contract (Bona-fide order from foreign buyer)
- Past export performance Condition of warehouse and processing plant
Specific Requirements for Importers
- Past import performance
- Pro-forma invoices
- Approved purchase order (if any)
- Letter of credit opened
- Marketability of the goods to be imported
Specific Requirements for Manufacturer
- Full description of installed machine including country of origin, year of manufacture, status and etc
- Production capacity
- Availability of spare parts
- Availability of raw material
- Raw materials consumption (Local and foreign)
- Marketability of the goods to be manufactured and sale outlet
Selam (Advance payment) mode of financing
This is a financing service that would be made available in cash for working capital purposes for customers engaged in agricultural sector as per the contract between the Bank and the Customer. It is a sales arrangement whereby the customer shall deliver the type of product she/he produces in accordance with the type, quality, quantity, and given period to the bank. Agent/third party./ The bank may require collateral from the customers to secure the finance.
Istisna’ (Work-in-progress) mode of Financing
Istisna’ financing is a mode of sale, at an agreed price, whereby the bank places an order to a manufacturer or a contractor to manufacture, assemble or construct, a specific commodity for a purchaser.
- Comprehensive feasibility study
- Bill of Quantity
- Certificate of ownership
- Approved construction plan
- Lease agreement and receipt of lease amount paid
- Project implementation schedule
- Agreement with contractors, manufacturer or supplier
Ijarah/ Lease Financing Mode of Financing
Lease/Ijarah mode of financing may be used for financing agricultural & Building and construction sector where all kinds of equipment leased.
In Ijarah, the bank /lessor/ hands over the capital goods to the customer /lessee/ for an agreed period at an agreed consideration. After the completion of lease payments, the bank may transfer ownership of asset to the client.
Specific Criteria for Ijarah Financing
In addition to the general eligibility criteria and terms and condition of Ijarah, the customer shall fulfil the following requirements:
- The supplier and lessee shall not be affiliated companies;
- The lessee should sign a letter of continuity. In which he/she/it specifies for using the leased asset in the lease period;
- The lessee must present necessary documents as stipulated in the checklist and other necessary documents; and
- The lessee shall provide acceptable collateral to secure the finance.
Required Documents for all Applicants
- Application Letter
- Renewed Trade License
- Tax Identification Numbers (TIN)
- Recent Tax Clearances
- Memorandum and Articles of Association (if PLC, S.C. etc)
- Audited Financial Statement
- Ownership Documents such as Land Holding Certificate, Ownership Booklet, etc
- Marriage Certificate of Borrowers and Mortgagors