Tapping the Potential of Islamic Finance in Retail Banking Industry in Tanzania Presented: By Yassir Salim Head of Islamic Banking NBC Ltd

Introduction Retail banking Serves the Communities. Retail Banking has been the backbone of the success of every Islamic finance company operating in the world. There is huge demand for Retail Banking facilities. Most of the Retail products are fairly simple and basic lifestyle requirements. Islamic Retail banking have gone from typical liability gathers to providing asset products that include home and Personal Finance, Auto Finance and shari’ah compliant Credit Cards.

Products offered in Tanzania by Islamic Financial Services Providers Deposit Financing Others 1. Current Accounts (based on Qardh) Asset Finance (based on Murabahah and Ijara Structure) Debit Card (based on Ujr Structure) 2. Savings Account (based on Mudharaba Structure) Plot Finance (based on Murabahah) 3. Fixed Deposit (based on Mudharabah Structure) Education Finance (based on Murabaha Structure)

Innovative Products Filling the Gaps 1 Innovative Products Filling the Gaps 1. Deposits and Investment Products Products 1. Current Accounts (based on Qardh Structure plus Takaful) 2. Savings Account (based on Mudharabah plus Takaful) 3. Fixed Deposit (based on Mudharabah Structure) 4. Objective Savings Accounts (Based on Mudharabah Plus Takaful component) – For Hajj, Children Education, Marriage Preparation etc.)

Innovative Products Filling the Gaps 2. Financing Products Others 1. Personal Finance (based on Murabahah, Ijarah Structure) Debit Card (Based on Qardh Structure) 2. Auto Finance (based on Murabahah or Ijarah) Credit Cards (based on Qardh and/ or Ujr Structure) 3 Home Finance (based on Ijara or Musharakah Mutanaqisah Structure) 4 Cash Finance (based on Ijarah - Buy and Lease back Principle, Bay’i Salam Structure) 5. Education, Travel, Medical, Ceremony Finance – (under forward lease i.e Ijarah Mawsufa bi dhimmah principle)

Innovative Products Filling the Gaps Islamic Banks within their retail banking platforms are segmenting their customer base from pure retail banking customers to wealthy customers and ultra – high net worth customers. The concept of relationship management and relation based selling have become more prevalent. The growing importance of retail fees based earnings.

Innovative Products Filling the gaps 3. Financing Products The Philosophy underpinning the establishment of Islamic Banks is to cater for the underprivileged. This can be executed solely by the Banks or through mutual understanding with flourishing Shari’ah compliant SACCOS. a) Personal Finance (under Qardh structure) – Interest free loans provided to the distressed and underprivileged for education, rehabilitation and for water and sanitation. c) Micro - initiative investments – collateralized investment provided to the graduated micro clients and micro entrepreneurs. d) Financing Social Entrepreneurship Sustainable Investments.

Conclusion The key strategy for marketing Islamic Banking products is innovation. Islamic Banks must always be at the cutting edge of developing new products. Islamic Finance products must be beyond mimicking conventional products; they must satisfy the customers banking needs and outperform the conventional products in terms of service and pricing.

Jazakallahu Khairan