Why Amana Bank is not closed for Friday prayer while its full Sharia compliant bank?
Doing business during Friday prayer is not allowed for Mukallaf (Muslim male, mature, dweller of the town and sane) and allowed for others. Amana Bank Shari’ah Board resolved that Amana Bank as a business enterprise is allowed to open during that time provided those who run it are not obliged to pray Jumuah (female staff or non-Muslims). As for those obliged and allowed to go for prayer but choose to remain, the fault is theirs and not the bank, for the bank has allowed them to go for Jumuah.
Some of the facilities AB offers fall under speculation or gharar which goes against Sharia principle i.e. guarantees, how can we justify this?
Amana Bank offer variety of guarantees using Kafala contract which is permissible Shari’ah compliant instrument. These guarantees may involves minor gharar (Gharar yasir) such as uncertainty of occurance which is unavoidable. However, Sharia prohibited excessive gharar (Gharar fahish) which is voidable.
The value of paper currency depreciates in inflationary situation in order to compensate lenders for erosion in the value of their principal, a scheme of “indexation” has been suggested. Is such a scheme acceptable from an Islamic banking point of view?
“It is not acceptable. Islamic point of view on lending
is that of charity rewarded ten-fold by the Almighty compared to donation. Hence though financially the value for money is lost due to inflationary situation, the rewards for it is never lost which is what the lender should aim
for. Furthermore, the root cause of decrease in the value of money is inflation which every government should
find a parmanent solution for it and indexation cannot resolve this in the long run. Hence rather than employing indexation, the lender should pressure the government
to curb inflationary situation in the country in first place. However, this isnot always feasible. Therefore Islamic banks can enter into Musharakah, Mudarabah and diminishing Musharakah transactions wherein their
return can automatically be adjusted with an inflationary situation. The rental rate for a short duration can be
fixed or variable. Accordingly Islamic banks can charge rental in Ijarah at a higher rate, if already provided in
the agreement, for any remaining period of the lease. However the rentals for a particular period, once accrued, cannot be indexed.“
Why Amana Bank doesn’t share losses with its depositors?
The current regulatory environment doesn’t recognize pure profit and loss sharing mechanism. Hence, depositors funds are protected from any losses arising from banking business. However, though sharing of profit and loses is the essence partnership contract, it has its own operational challenges to do so especially in a market where conventional banks are still strong like Tanzania. Unless regulatory framework changes, Amana Bank shareholders agrees to absorb losses and share the profit only.
What Amana Bank does in case of delays to repay?
In case the customer experience difficulties to repay timely, he should immediately notify the bank, stating the reasons for his delays and may seek extension of repayment period. The bank will evaluate the reasons and if satisfied extend the period after consulting the customer. However, if he does not inform the bank, the bank considers him as defaulter and hence shall enforce him to repay. As gesture of commitment, at the beginning customers have to commit themselves to pay a certain amount of money for charitable purposes managed by the bank Shari’ah board in case they default.
What are the instruments employed by Amana Bank?
We employ Mudharaba, Murabaha, Qard, Kafala and Ijaratul A’mal contracts.
Why do we charge guarantees as conventional banking are doing? Is it sharia compliant?
Islamic Banks world wide charge a fee for service it offers. The reason for charging a fee is because it’s a service that the bank incurs some administrative expenses and expose itself to financial risk in case the guarantee is called. The only difference between AB guarantee and conventional bank guarantee occurs when the guarantee is called, conventional bank will turn it to interest bearing loan where as under Islamic banks its loan repayable at cost without any additional charges.
Why do we charge below minimum balance fee for failure to deposit the same day when the customers open an account (Existing Customers). Is it sharia compliant?
It is not Shariah compliant to charge customer for failure to deposit same day after the account was opened. The branch managers should refund customer immediately upon occurance.
Why do we have penalty clauses in Murabaha agreements while some scholars ruled that it is non sharia compliant?
Our Shari’ah supervisory board resolved that the clause doesn’t not invalidate the Murabaha contract because the clause aims to deter against moral hazards which is one of the source of credit risk. Under the clause, the customer commits himself and a sign of goodwill, that he will service his liability without failure. Furthermore, the penalty amount is channeled for charitable use under the supervision of Shari’ah board once the customer has failed to notify the bank on his failure to pay. It is important to note that, Amana Bank doesn't benefit with a single coin collected as a penalty but rather takes the trouble to distribute it to those who deserve. This practice is also supported by the Shari’a board of AAOIFI based in Bahrain.
Why do we go into insurance arrangements while it is not sharia compliant?
The bank’s customer and the public have interest in the bank since they have entrusted it with their funds to conduct business. The key bank business is to provide finance to deficit unit using various arrangements and hence requires a collateral. The collateral is exposed to many risks such as fire and other perils which may render it valueless to repay the amount of finance taken. To protect public Maslaha (interest) and the financial system of the country and due to absence of Islamic Insurance (Takaful), we have to use conventional insurance for that purpose until we have Takaful. This is permissible dharura (emergence) since in case of failure to have an insurance, the public shall suffer huge losses and may lead to collapse of the financial system.
May I know the indicative return on fixed deposit?
The bank has historical information on how much was paid previous quarters which it can share with you or provide you with indicative rate of return on deposit placed. However, we shall pay the actual profit based on the income from financing for the period.
In murabaha contract, who is incurring the clearing charges of the cargo from port to customer’s premises?
It is one of the discussion points before financing through Murabaha. The bank is willing to accommodate the cost of clearing, customs and transportation. However, customers prefer to handle this charges themselves to reduce the cost of finance.
In case of serious problem can customer holding hajj account allowed to withdraw?
Yes! He may request the bank to allow him to withdraw his funds from the account.
What are differentiated services that An-nisaa account offers to women?
Separate Woman teller as well as free entrance to annual women conference sponsored or organized by the bank.
Why Amana bank don’t offer small loans to customer compared to other conventional banks?
Separate Woman teller as well as free entrance to annual women conference sponsored or organised by the bank.
18-Jun-2018 // TZS