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.
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.
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
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.
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.
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.”
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.