Tamkeen and Bahraini retail and commercial banking institution, BMI Bank, announced an extension to their successful alliance providing Sharia-compliant financing for enterprises within the local private sector to fulfill their financial needs at a competitive cost.
Initially launched in November 2010, the joint scheme offers a suite of Sharia-compliant financial products under the umbrella of the Islamic Banking division within the Bank.
The new agreement marks the third contribution of BD10m made by the Bank expanding the total portfolio to a total of BD30m.
A ceremony was held to mark the occasion at Tamkeen’s Headquarters and attended by Jamal Al-Hazeem – Chief Executive Officer of BMI Bank, Salah Khalifa – Assistant General Manager and Head of Islamic Banking at BMI Bank, Dr. Ahmed AbdulGhani Al Shaikh – Vice President for Enterprise and Human Capital Development at Tamkeen and Aisha Al Balushi from the Private Sector Support Department at Tamkeen.
As part of the agreement, Tamkeen will guarantee 50% of the total financing amount as well as subsidise 50% of the profit payments due from customers. Through this financing scheme, enterprises within the private sector are eligible to receive financing ranging from BD10,000 to BD500,000 to help design a higher growth trajectory for their companies.
This scheme offers a range of trade finance products such as letters of credit and guarantee, Murabaha financing which covers working capital, machinery and equipment financing as well as Ijara financing at a subsidized profit rate of 4% per annum on reducing balance with an option of a longer repayment tenor of up to 10 years.
Speaking after signing the extension, Jamal Al-Hazeem, Chief Executive Officer of BMI Bank, said, “As a locally responsible bank, we are honored to further extend our fruitful relationship with our partner Tamkeen by entering the third phase of the scheme. One of the significant characters of a flourishing and fast-growing economy is a thriving small and medium enterprises (SME) sector. SMEs play a fundamental role in the overall development of a nation as vehicles to employment and job creation, production, design and more importantly innovation. They are development entrepreneurs providing desired sustainability.”
Al-Hazeem said, “The export of these industries constitute 8% of the Kingdom’s total industrial employment amounting to 22,000 employees, while the industrial investment is estimated to form 10% of the total investments. By the number of employed persons, the small and medium enterprises form 76% of the approximate total 400 industries. The engineering, metal, food and chemical industries form up to 70% of the total small and medium industries in Bahrain. To date the bank has provided financing to over a 100 SME’s through the scheme with manufacturing, construction and wholesale & retail trade accounting for 50% of the allocated amount. We, at BMI Bank feel extremely gratified to be able to participate in creating a better environment for SMEs to thrive in and contribute to the process of nation building.”
Also commenting on this partnership, Tamkeen’s Vice President for Enterprise and Human Capital Development, Dr. Ahmed AbdulGhani Al Shaikh, said, “We are continuing with our mission to support the private sector and put enterprises on the fast-track towards success. Our finance schemes provide enterprises with the capital they need for growth and expansion through various Sharia-compliant financing solutions. In this regard, we are pleased to renew our partnership with BMI bank which is one of our leading partners in the finance scheme. This agreement will continue to bridge the finance gap for many Bahraini enterprises that require the necessary funding for various operational activities.”
Earlier last year, BMI Bank signed a separate ICT financing agreement with Tamkeen, earmarking BD1m to finance its ICT Finance Scheme where beneficiaries could apply for financing ranging from BD3,000 to BD50,000 to finance the cost of their ICT systems. The aim of the scheme is to enable private sector enterprises to fulfill their ICT needs and enable them by providing a subsidy in the profit rate and a grant in the form of a discount on the principal finance amount. As part of the agreement, Tamkeen contributes to financing 100% of the profit cost on behalf of the beneficiary enterprise who would be entitled to an additional subsidy of a maximum of 25% discount on the principal of the financed amount if the amount is repaid within a shorter time period.
Eligibility criteria for applicants, according to the enterprise financing scheme’s terms and conditions, is the same as for other Tamkeen schemes – SMEs must be located in Bahrain but not necessarily have Bahraini ownership, have Bahrainisation levels as required by LMRA and have paid all fees to LMRA. The establishment has to be in business for at least 2 years. It is designed to deliver funds to enterprise and SMEs within 15 working days of receiving applications and relevant documents and allows entrepreneurs flexible repayment with exemption of all future profits in case of early settlement of the full financing amount.
Ameinfo
