Conventional City Bank gears up to compete with Islamic banks

City Bank, Bangladesh’s one of the oldest and leading conventional lenders, has unveiled its new Islamic banking services across the country aiming to grow its business through shariah-compliant products. This time, the bank will use modern technology to reach out to the maximum number of people.

From Sunday a wide range of shariah-based products and services will be available at City Bank’s all branches, sub-branches, Citygem and SME centres across the country, a move which no other banks did before.

Customers will also be able to avail Islamic banking services through City Bank’s world-class Digital Banking app ‘Citytouch’. In addition, City Bank introduced the country’s first American Express Islamic credit and debit card for Islamic customers.

“We will take our Islamic banking portfolio to Tk 10,000 crore soon from present Tk 2,000 crore,” said Aziz Al Kaiser, chairman of City Bank, at the launch of the City Islamic at The Westin Dhaka on Sunday.

City first introduced Islamic banking window in 2003 in the name of City Manarah. But the window failed to yield expected business.

“I was upset that City Manarah could not generate business. We could not reach out to the villages because of the lack of modern technology. This time we have used all modern technologies to provide customers almost all Islamic financial services they require,” said Kaiser.

Islamic banking in Bangladesh, where nearly 90 percent of 17 crore population are Muslims, has been growing faster than conventional banking. As a result traditional banks are resorting to Islamic banking, either by opening windows or branches. Some conventional banks – Standard Bank, Global Bank and Union Bank – have converted into full-fledged Islamic banks in recent years to take the total tally to 10.

Now Islamic banks account for almost one-third of the banking industry’s assets and it is increasing faster than traditional banks riding on the faith that ‘interest is banned in Islam’.

“Thousands of crore taka remain idle across the country and some people call them ‘mattress money’. We will bring that money into the banking system, use it and share profits with depositors,” said the City Bank chairman.

In order to ensure interest-free profit distribution, City Islamic provides profit among its customers through investment income sharing ratio system. Unlike other banks, City Islamic will not announce pre-determined profit rates for depositors. In this newly launched City Islamic banking system, customers will be able to avail benefits ranging from personal banking to corporate banking and trade.

Vice Chairman Hossain Khaled sees huge potential of Islamic banking in Bangladesh if City Bank can provide quality products and services.

“There is a scope to bring an unbanked population into the banking system through Islamic banking services,” Khaled said.

Shariah Supervisory Committee Chairman Dr Md Anwar Hosain Molla and Managing Director and CEO Mashrur Arefin also spoke among others.