CAIRO Feb 12 Egypt's main agricultural bank is
launching Islamic retail services this month to meet increasing
demand in rural areas, a bank official told Reuters.
"We are launching sharia-compliant retail banking this month
with a portfolio of 50 million pounds ($7.5 million) and can
raise that to 100 million" next June based on demand, said Abdel
Rahman Al Kafrawi, head of Islamic transactions at Principal
Bank for Development and Agricultural Credit (PBDAC).
Government-owned PBDAC will offer retail finance at 18
Islamic branches through murabaha and musharaka structures, he
said. The bank has offered Islamic finance on a very small scale
for several decades at 10 branches, and in 2012 won the central
bank's approval to raise the number to 24 branches.
Al Kafrawi said the new Islamic services would cover areas
including purchases of durable goods and agricultural equipment,
the setting up of clinics and medical laboratories, and the
financing of education fees.
The bank has 1,210 branches across the country. Its chairman
Muhsin Al Batran told reporters last September that the bank
would expand its Islamic services since a considerable
proportion of farmers declined to take conventional loans
because of Islam's ban on interest.
Of 5.8 million farmers who owned land, only about a million
had borrowed from the PBDAC, he said, adding that the bank aimed
to raise this to 3 million by increasing Islamic finance and
The share of Islamic business in the bank's overall business
is likely to remain tiny for the foreseeable future, however, as
its total credit portfolio was 26 billion pounds in June.
Islamic finance is expected to grow in Egypt after the
overthrow in 2011 of Hosni Mubarak, whose government neglected
the industry for ideological reasons. Egypt's new government,
led by an Islamist president, aims to expand the industry.
(Editing by Andrew Torchia)