TBY talks to Prasad Abraham, CEO of Al Hilal Bank, on promoting Islamic banking as a commercially successful venture in an unfamiliar market, and Kazakhstan’s path to becoming an Islamic banking center by 2020.
TBY What is the history of Al Hilal, and why do they call you the “orange bank”?
PRASAD ABRAHAM Al Hilal Bank in Kazakhstan is a subsidiary of Al Hilal Bank in Abu Dhabi, which in turn is 100% owned by the government of Abu Dhabi. The bank was established in Kazakhstan based on an intergovernmental agreement signed between the Republic of Kazakhstan and the government of the UAE. The parent bank was established in Abu Dhabi in 2008, and the Kazakhstan subsidiary was launched in 2010. It is the first Islamic bank in the country. One of the main principles behind the creation of Al Hilal Bank was to demonstrate that an Islamic bank can be dynamic and progressive, while at the same time remaining strictly compliant with sharia principles. It is important to present this model well in Kazakhstan, a market that is 60% Muslim, yet unfamiliar with Islamic banking. Al Hilal Bank chose orange for its branding as it represents liveliness and dynamism, and therefore encapsulates our business ethic of principled professionalism and putting the individual at the heart of everything we do.
What sparked Al Hilal’s business interest in the country, and led to the establishment of the bank in Kazakhstan in 2010?
Traditionally, there have been strong brotherly relations between the UAE and Kazakhstan. Secondly,in 2009 Kazakhstan introduced comprehensive legislation in parliament to facilitate Islamic banking opportunities. The bank was looking for foreign expansion prospects, and when this announcement was made, we decided to seize the opportunity and move in. The lack of any Islamic banking competitor also made the proposition even more attractive. It was a challenge worth taking on, and we have not regretted our decision.
As a new concept in Kazakhstan, what strategies are you developing to increase awareness and demand for your Islamic banking products and services?
We have three main goals in Kazakhstan. The first target is to become a successful Islamic bank from a commercial point of view. Secondly, our aim is to raise the profile of Islamic banking in the country. Finally, because we represent the government of Abu Dhabi, we are seeking opportunities for UAE investors to participate and facilitate in the economic growth of Kazakhstan. This will help the UAE to diversify its oil and gas revenues. This also benefits Kazakhstan because it is looking for more investment. We facilitate enhanced cooperation between the two countries.
Do you believe the regulatory framework for Islamic banking is complete and satisfactory?
The documentation processes and finalization of contracts took longer than expected, yet Kazakhstan has approved comprehensive legislation to facilitate Islamic banking. I would say 80%-90% of the process has been addressed, with certain tax aspects requiring further fine-tuning as part of the current legislation. The remaining issues will be ironed out soon, and the process will be complete. There is active involvement and support from key ministries and regulatory bodies to facilitate the process. We are very happy with the framework, and are thrilled Kazakhstan has taken these steps to allow the country to develop an Islamic banking sector.
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