Non-interest Banking and How Entrepreneurs Can Benefit from It

To get a bank loan in Nigeria costs an arm and a leg. Your chances even depend on who you are as a corporate entity. Many, however, don’t know there are banks ready to give persons loans just for the asking.

For the loan sharks, credit-worthy biz owners seeking loans should be ready to pay above 25 percent interest rate annually. Some banks charge up to 26 percent. That’s prime lending.

For the deadbeats, the stake rises higher. This category of borrowers accepts the maximum lending rate: from 35 percent upwards.

The banks have their reasons for giving borrowers this hell. Consider the ever-increasing monetary policy, the naira devaluation catastrophes, and the sky-high bad, toxic debts banks have ramped up.

For those same reasons, some banks still take the risk of lending at no cost to credit-worthy customers. Not entirely like you’re get something for nothing. One condition abides: profit and loss sharing.

That may not appeal to the deposit money bank pursuing zero-sum deals. There aren’t many of these ethical bankers playing in the non-interest-banking segment of Nigeria’s financial sector.

But below are some the NDIC recognizes.

1)Jaiz Bank Plc

2)Taj Bank

3)Lotus Bank Ltd

Jaiz Bank Ltd

Jaiz Bank Plc is among companies trading on the Nigerian stock market, and proud to run ethical banking. The reason is obvious: Jaiz operations follow Islamic principles of non-usury lending.

Others of its principles include Ijara wa Itina lease to own), Musharaka (equity financing, Wakala (bond and guarantee). All in conformity with Sharia.

To make you take it seriously, Jaiz has the national banking authorization, and its balance sheet is growing: from N12 billion in 2012 to N379 billion as of 2022.

Here’s the clincher: You don’t have to be a Mulsim to borrow from Jaiz.

Lotus Bank Ltd

This one operates in many ways like Jai does, too: in philosophy and risk sharing. The difference is largely semantic. Its products include equity-based contract, fee-based contracts, Sale-based contracts, and lease-based contracts.

And it has Sukuk, too, which is direct asset ownership interest.

Again, the services also extend to the unconverted.

Taj Bank Ltd

Taj opened its Abuja shop in 2019, and has spread to Kano, Sokoto, and others, totaling 338 branches so far.

It operates those Sharia principles Jaiz and Lotus share, too, including the nation-wide operation. And its structure reflects its business-mindedness—not religion. For on its board of directors are Christians from the southeast, the southwest, and the north central.

Others

These banks and some commercial one participate in non-interest government interventionist loan schemes. A couple of the schemes are on-going the Non-Interest Targeted Credit Facility (TCF-NI)

Among them are the Agriculture Graduate and Small Business Enterprise Scheme, and the MSMEs (Micro, Small and Medium Enterprises.

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