Internet Banking
Internet Banking

Interest Free Banking

Interest Free Banking

Nib International Bank introduced Interest-Free Banking (IFB) services in response to the growing demand from customers and the bank’s desire to serve financially excluded portion of the community. After obtaining the necessary operational permit from the National Bank of Ethiopia in September 2015, the bank officially launched its IFB services on December 19, 2015.

 

The Bank is offering the service to the customer under the Brand name of “NIB HALAL”.

Customers can get the IFB services of the bank across all branches of the Bank, alongside dedicated branches that exclusively offer interest-free banking services.

The Bank offers different range of Deposit and Financing products in compliance with the Shari’ah rules and principles ensuring that it is free from interest-based transaction.

IFB DEPOSIT PRODUCTS

The Bank offers IFB deposit products to esteemed customers under Mudarabah and Wadi’ah contract.

       1. MUDARABAH DEPOSIT PRODUCT

Mudarabah (Profit or Loss Sharing) deposit account is a type of deposit contract where the bank (Mudarib) receives a deposit from customers (Rabul-Mal) and invests it in a permissible business venture; the profit generated from the business will be shared based on the pre-agreed profit sharing ratio.

The Bank offers different types of Mudarabah product that suits the customers’ demand;

A. Mudarabah Saving (Normal)

Features and Value Proposition

  1. Individuals who are 18 years and above can open the account;
  2. Minors can open the account through parents or legal guardians;
  3. The initial deposit amount to open such account is Birr 500 (Five hundred);
  4. The minimum average daily deposit balance to be eligible for-profit sharing shall be Birr 100,000.00 (One hundred thousand only), otherwise, the profit is forfeited; and
  5. The Profit-Sharing ratio shall be 70:30 (Customer to Bank).

 B. Mudarabah Hawa Saving

It is a Mudarabah saving account that is designed for women.

Features and Value Proposition

  1.           Any woman at the age of 18 and above can open Mudarabah Hawa saving account;
  2.       The initial deposit amount to open the account is Birr 500 (Five hundred);
  3.         The minimum daily average balance to be eligible for profit sharing shall be birr 10,000.00 (Ten thousand) for any profit distribution period, otherwise, the profit is forfeited; and
  4.       The customer shall get a higher profit-sharing ratio, which is 75:25 (Customer to Bank).

C. Mudarabah Children Saving Account

Mudarabah Children saving account is a Children deposit account established to support children until they reach the age of 18.

  Features and Value Proposition

  1. The parent or the legally appointed guardian of the minor should process the account opening, deposit, and withdrawal;
  2. If parents are operating the account jointly, and if one of the parents is incapable of operating the account for various reasons, the other one may be authorized to operate the account upon a court decision;
  3. Parents or guardians are not allowed to withdraw from a minor (child) account after the child attains 18 years of age and the account type shall change to a Mudarabah Saving Normal account;
  4. The initial balance to open this account is birr 500 (Five hundred);
  5. The average daily minimum balance for profit eligibility shall be 10,000.00 (Ten thousand) and above, otherwise, the profit is forfeited; and
  6. Customer shall get a higher profit-sharing ratio, which is 75:25 (Customer to Bank).

D. Mudarabah Hajj Saving Account

Hajj Saving Account is designed for the individual who plans to perform Hajj or Umrah;

Features and Value Propositions

  1. Individuals who are above 18 years old can open the account;
  2. Minors can open an account through parents and legal guardians;
  3. The initial deposit amount to open such account is Birr 500 (Five hundred);
  4. The minimum average daily deposit balance to be eligible for profit sharing shall be 10,000.00 (Ten thousand), otherwise, the profit is forfeited;
  5. Apart from regular monthly deposit contributions, if the customer wishes to make the desired journey earlier than initially scheduled, he or she can deposit additional amounts in order to complete the savings amount;

E. Mudarabah Equb Saving Account

Mudarabah Equb account is saving account targeted to establish Ekub with completing value proposition.

Features and Value propositions:

  1. Any formal and informal Equb can open Mudarabah Equb Saving account;
  2. The Bank shall provide attractive profit-sharing ratio 75/25 (Customer to Bank)
  3. The minimum amount to be eligible for-profit sharing shall be Birr 100,000.00 (One Hundred Thousand Only)
  4. The bank shall give priority in case of personal financing requests from Equb organizer/s (Chairperson, Cashier and Secretary) when the average six-month daily balance of the Equb birr 1,000,000.00 (One Million) and above;
  5. The bank may sponsor opening and/or closing ceremony of Equb depending on their transaction volume and bank relationship. This will be managed based on standard criteria;
  6. The bank may provide cash collection service from Equb premises free of charges;
  7. Opening deposit, withdrawal and use Equb with volume of less than Birr 100,000.00 (One hundred thousand) can be through passbook and the bank provide cheque book for Equb volume above Birr 100,000.00 (One hundred thousand) based on demand of the Equb saving account customer.

F. Mudarabah Social Saving Account

Mudarabah Social Saving Account is a saving account designed for socially established unions or Edir.

Features and Value propositions:

  1. Any formal or informal Edir and any other related community-based saving can open this account
  2. The profit-sharing ratio is 75:25 (Customer to Bank)
  3. The minimum average balance to be eligible for-profit sharing is Birr 15,000.00 (Fifteen thousand Birr).
  4. The Bank may provide tent, table, umbrella and other related items
  5. The Bank gives priority in the case of personal loan request of Edir organizers /Chairperson, Cashier, Secretary/. Eligibility for this benefit shall be average balance of Birr 500,000.00 (Five hundred thousand) and above
  6. The bank may provide cash collection services on the Edir premises free of charges.

 G. Mudarabah Fixed Time Deposit

Features and Value propositions:

  1. The required minimum initial deposit to be eligible for profit sharing is Birr 100,000.00 (One Hundred Thousand Only);
  2. The PSR for Fixed time deposits will be determined through negotiation;
  3. The Profit-sharing ratio (PSR) will vary based on the duration and volume of the deposit; and
  4. Profit will be calculated every month, but it will be credited to the depositors’ account on the maturity of each deposit contract(s).

        2. WADI’AH DEPOSIT PRODUCTS

The Bank’s Wadi’ah deposit product operates in Wadi’ah Yad-Dhamanah contract, which is a form of contract, the Bank acts as the safe keeper or trustee for the fund deposited by the customer. Under the Wadi’ah Contract, the Bank offers different products to fit the customers demand, the products offered by the Bank is listed here under;

 

A. Wadi’ah Current Deposit

It is a type of Wadi’ah deposit product and designed for customers who opt to transact their money through chequebook.

Features and/or Value Propositions

  1. The required minimum balance to open such account is Birr 500 (Five hundred) and 1,000 (One thousand only) for individual and business customers respectively;
  2. Documentation that is required to open a Wadi’ah Current account is the same as that of a conventional Current account; and
  3. The Bank issues a Cheque Book to operate the account.

B. Wadi’ah Saving /Normal/

Product Features and/or Value propositions

  1. The minimum balance to open this type of account is Birr 50.00 (Fifty only);
  2. There will be no service charge in relation to such account except for cost recovery purposes in providing such services such as passbook replacement;
  3. The account will be operated free of ATM and PoS service charges.

C. Wadi’ah Hajj

Hajj Saving Account is designed for the individuals who plan to perform Hajj or Umrah;

Features and Value Propositions

  1. The minimum balance to open this type of account is Birr 50.00 (Fifty only).
  2. A regular monthly deposit contribution may be set, based on the depositor’s ability and willingness;
  3. Apart from regular monthly deposit contributions, if the customer wishes to make the desired journey earlier than initially scheduled, he or she can deposit additional amounts in order to complete the savings amount; and
  4. After completion of the desired deposit amount, the customer has the right to redeem his or her funds to go for Hajj or Umrah;

D. Wadi’ah Student

This account is prepared for secondary and tertiary level students to encourage their saving culture and to help meet the monetary requirement to complete their education.

Product Features and Value Proposition

  1. The initial deposit amount to open the account is Birr 100 (one hundred);
  2. The account can be opened and operated either individually or jointly in the name of individual(s); and
  3. The student should operate this account only during his/her stay in the school/college/university. Up on completion of education, the account type shall be changed to Wadi’ah Normal saving account.

E. Wadi’ah Zakat

A Wadi’ah-based deposit product which is designed for customers, who are eligible to pay the obligatory donation, to the needy, vested on them as per their religious order. The account will help customers to save money to meet this requirement. 

Product features eligibility criteria

  1. Organizations that work on the collection and distribution of Zakat funds;
  2. The required minimum initial deposit to open Zakat account is Birr 100.00 (One hundred);
  3. Zakat Deposit account can be opened and operated either individually or jointly. In case of joint account holders, the joint signatories cannot be more than three signatories;

F. Wadi’ah Children

It is a Wadi’ah-based product, designed to encourage the saving culture of Children and to support them until they reach the age of 18.

Product Features and Value Propositions:

  1. The initial balance to open this account is birr 100.00 (One hundred);
  2. The parent or legally appointed guardian of the minor should process the deposit account opening, and operation of the account;
  3. If parents are operating the account jointly, and if one of the parents is incapable of operating the account for various reasons, the other one may be authorized to operate the account upon court decision; and
  4. When the minor attains 18 years of age, the account shall be transferred to Wadi’ah Saving Account, and Parents or guardians are not allowed to withdraw from the account.

G. Wadi’ah Special Saving Account

This account is introduced for those who are interested in operating their saving account with the use of Cheque.

Features and Eligibility Criteria

  1. The minimum initial deposit for Wadi’ah Special Saving Account is Birr 500.00 (Five hundred);
  2. This account is operated with the use of Cheques; and
  3. The customer should present a taxpayer identification number (TIN) and a valid ID. However, Business license is optional.

H.Wadi’ah FCY

It is a type of foreign currency account maintained in hard currency and can be used locally in ETB or transferred abroad in foreign currency without the necessity of obtaining exchange permit.

         3. Murabahah (Cost Plus profit)

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