I want to take out a loan and have seen good rates in conventional and Islamic banks. I am a non-Muslim so I am wondering if it makes any difference which bank I choose to take a loan from. Also, what fees am I likely to pay depending on which type of bank I decide to borrow from? NA, Dubai
The expert advice
Philip King, Head of Retail Banking, Abu Dhabi Islamic Bank (Adib)
Islamic banks are welcoming to non-Muslims and Muslims alike, so this should not be a consideration when you are looking at taking out a loan. You should concentrate on comparing rates, and importantly, the conditions of the financing, customer service and the bank's ethics. Surveys conducted for Abu Dhabi Islamic Bank (Adib) have shown that most customers really value straightforward, simple and transparent banking – for example, they want the full terms and conditions made clear so that there are no misunderstandings.
Islamic banks use the term “profit rate” rather than “interest rate” because of the way financing is structured – not as a loan, but as the purchase and resale of a real asset, which can be a car, house, a commodity or a stock, depending on the type of financing you are looking for.
One of the most common forms of Islamic financing is called “murabaha”. Here, the bank enters a contract to buy an asset on behalf of the customer and re sells it to the customer at a marked up price which is then re paid in instalments over a fixed period of time.
There are certain benefits to the customer over conventional loans. The amount to be paid by the customer is fixed for the entire period at the beginning of the term, so does not increase even if the financing term is subsequently increased. There are no late payment charges and no compounding of profit. Because of the way the financing is structured, the customer agrees to make payments throughout the full period.
Islamic banks tend to work closely with their customers and are considerate if their circumstances change. For example, Adib offers job loss protection to customers who have taken out a murabaha financing product. This entitles them to a six-month break on all repayment instalments on personal and vehicle financing, in the unfortunate event of losing their job.
The reader’s advice
Joy Fernandes, Dubai
I am a non-Muslim as well and had a similar dilemma a couple of years ago. In the end I went with the Islamic finance option simply because the bank offered the best rate at the time. I also switched my salary account to the Islamic bank as that helped me secure an even lower profit rate on the loan.
My loan has been calculated using the murabaha method. For customers like me, who want cash, the bank buys stocks on a local exchange such as the Dubai Financial Market and sells them back to the customer at a profit. This method released the cash to me and I have a three-year loan with fixed monthly repayments.
When it came to fees, I had a loan processing fee of Dh500 to pay on top of the profit rate for the loan itself. At times I have paid off lump sums of the loan to reduce the tenure of the loan. When that happens I have to pay a fee of 1 per cent on the amount I am paying back. But I still gain as by paying off the loan early, I also pay less interest on the loan overall.
The other benefit of taking on an Islamic loan and an Islamic bank account, particularly from a local bank, is that I have found the bank offers far more product options than the conventional international institution I banked with before.
As a result I have also opened a prize-linked savings account at the Islamic bank and a savings account that rewards me with air miles the longer I hold the money in the account.
Next month’s Money Clinic:
There are a couple of international brands that I would like to buy shares in but to do so I would have to access local stock markets. One of the brands is listed on the New Zealand stock exchange and the other on the Singapore Exchange. As someone new to the concept of buying stocks, what is the best way of investing in these companies from here in the UAE? P D, Abu Dhabi
Every month The National features a reader's personal finance problem. If you have an issue or would like to suggest a solution for another's reader's concern, write to pf@thenational.ae
Attacks on Egypt’s long rooted Copts
Egypt’s Copts belong to one of the world’s oldest Christian communities, with Mark the Evangelist credited with founding their church around 300 AD. Orthodox Christians account for the overwhelming majority of Christians in Egypt, with the rest mainly made up of Greek Orthodox, Catholics and Anglicans.
The community accounts for some 10 per cent of Egypt’s 100 million people, with the largest concentrations of Christians found in Cairo, Alexandria and the provinces of Minya and Assiut south of Cairo.
Egypt’s Christians have had a somewhat turbulent history in the Muslim majority Arab nation, with the community occasionally suffering outright persecution but generally living in peace with their Muslim compatriots. But radical Muslims who have first emerged in the 1970s have whipped up anti-Christian sentiments, something that has, in turn, led to an upsurge in attacks against their places of worship, church-linked facilities as well as their businesses and homes.
More recently, ISIS has vowed to go after the Christians, claiming responsibility for a series of attacks against churches packed with worshippers starting December 2016.
The discrimination many Christians complain about and the shift towards religious conservatism by many Egyptian Muslims over the last 50 years have forced hundreds of thousands of Christians to migrate, starting new lives in growing communities in places as far afield as Australia, Canada and the United States.
Here is a look at major attacks against Egypt's Coptic Christians in recent years:
November 2: Masked gunmen riding pickup trucks opened fire on three buses carrying pilgrims to the remote desert monastery of St. Samuel the Confessor south of Cairo, killing 7 and wounding about 20. IS claimed responsibility for the attack.
May 26, 2017: Masked militants riding in three all-terrain cars open fire on a bus carrying pilgrims on their way to the Monastery of St. Samuel the Confessor, killing 29 and wounding 22. ISIS claimed responsibility for the attack.
April 2017: Twin attacks by suicide bombers hit churches in the coastal city of Alexandria and the Nile Delta city of Tanta. At least 43 people are killed and scores of worshippers injured in the Palm Sunday attack, which narrowly missed a ceremony presided over by Pope Tawadros II, spiritual leader of Egypt Orthodox Copts, in Alexandria's St. Mark's Cathedral. ISIS claimed responsibility for the attacks.
February 2017: Hundreds of Egyptian Christians flee their homes in the northern part of the Sinai Peninsula, fearing attacks by ISIS. The group's North Sinai affiliate had killed at least seven Coptic Christians in the restive peninsula in less than a month.
December 2016: A bombing at a chapel adjacent to Egypt's main Coptic Christian cathedral in Cairo kills 30 people and wounds dozens during Sunday Mass in one of the deadliest attacks carried out against the religious minority in recent memory. ISIS claimed responsibility.
July 2016: Pope Tawadros II says that since 2013 there were 37 sectarian attacks on Christians in Egypt, nearly one incident a month. A Muslim mob stabs to death a 27-year-old Coptic Christian man, Fam Khalaf, in the central city of Minya over a personal feud.
May 2016: A Muslim mob ransacks and torches seven Christian homes in Minya after rumours spread that a Christian man had an affair with a Muslim woman. The elderly mother of the Christian man was stripped naked and dragged through a street by the mob.
New Year's Eve 2011: A bomb explodes in a Coptic Christian church in Alexandria as worshippers leave after a midnight mass, killing more than 20 people.
THE BIO
Occupation: Specialised chief medical laboratory technologist
Age: 78
Favourite destination: Always Al Ain “Dar Al Zain”
Hobbies: his work - “ the thing which I am most passionate for and which occupied all my time in the morning and evening from 1963 to 2019”
Other hobbies: football
Favorite football club: Al Ain Sports Club
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