go back

Meethaq car finance gains in popularity

MUSCAT, 15 April 2013 – The first-of-its-kind Shari’a compliant car finance product in the Sultanate launched by Meethaq Islamic banking from Bank Muscat has gained in popularity owing to its Islamic financing mode of Murabaha.

 

The benefits of Meethaq car finance include financing up to 80 per cent of the car value and repayment tenure up to 8 years. The bank does not charge any processing fee and offers competitive pricing. With minimal documentation and fast processing, the car finance also offers free Takaful life coverage for customers. Meethaq car finance is available for Omanis and expatriates holding valid resident card and a minimum monthly income of RO 250.

 

Sulaiman Al Harthy, Group General Manager - Islamic Banking, said: “Meethaq is gratified by the big response to the innovative car finance which was launched as part of the focus to take the lead in offering a suite of banking products which combine traditional values with modernity. Meethaq has adopted the best practices in Islamic banking and finance worldwide to combine a robust model which protects customers and complements the Islamic banking industry. The Meethaq strategy is to attract customers through innovative Shari’a based products and services. The operations are managed by an experienced team, separate from conventional banking.”

 

Meethaq car finance is based on Murabaha, a form of financing done on the basis of sale. Meethaq, instead of giving a loan, purchases the car as per customer’s description and sells it to him at a cost plus agreed profit. Under Meethaq car finance, the subject matter of the contract is the car and the deferred installments, and not money against money. The bank buys the car according to the customer’s specification and sells the same to the customer against deferred repayments by concluding a Murabaha sale contract. 

 

Every Meethaq product goes through a process of Shari’a compliance certification by the Shari’a Supervisory Board and the car finance has been created in line with the guidelines of the Central Bank of Oman.

 

Al Harthy added: “Meethaq stands out for its independent Shari’a Supervisory Board, separate capital allocation from shareholders’ money, unique risk management tools, complete fund segregation, separate books of account, core banking system which supports Islamic banking operations, stand-alone Islamic banking branches and proper profit distribution mechanism among investment account holders/depositors. The adoption of AAOIFI standards (Accounting & Auditing Organisation for Islamic Financial Institutions) distinguishes Meethaq Islamic banking practices in terms of standardisation of products and services.”

 

Bank Muscat is the first commercial bank in Oman to receive CBO’s approval and begin independent Islamic banking window operations as per the requirements of Islamic banking regulatory framework of CBO. Meethaq Islamic Banking has invested in staff, systems and controls to ensure the service is delivered in a professional, segregated and fully Shari’a compliant manner.