The joint scheme was initially launched in November 2010, and offers a suite of Sharia-compliant financial products under the umbrella of the Islamic Banking division within the Bank. The new top-up agreement is the second contribution in less than a year to be added to BMI Bank’s funding pool resulting in a total portfolio of BD 20 million.
As part of the agreement, Tamkeen will guarantee 50% of the total financing amount as well as subsidise50% of the profit payments due from customers. Through this financing scheme, enterprises within the private sector will be eligible to receive financing ranging from BD 10,000 to BD 500,000 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 subsidised profit rate of 4% per annum on reducing balance with an option of a longer repayment tenor of up to 10 years.
“Our strategic partnership with Tamkeen, which began in 2010, has grown from strength to strength with customers reaping the rich benefits that the scheme has to offer. Enterprises form the backbone of any economy and as a responsible local retail and commercial Bank, I am pleased to be able to participate in providing them with convenient financial solutions that help in enhancing and increasing their productivity,” Jamal Al-Hazeem – Chief Executive Officer of BMI Bank, said.
“A key factor for any competitive yet successful economy is the presence of a strong and well developed SME segment. Bahrain’s economy is characterised by various competitive sectors with SMEs dominating that share. Over the years and through the constant support of governmental, semi-governmental and private initiatives, Bahrain has transformed itself into a leading country that is well equipped today to face future challenges and take advantage of the opportunities within its economy. BMI Bank is privileged to be part of the welfare of this segment and aligned its strategies in-line with Bahrain’s business strategic vision,” said Salah Khalifa, Head of Islamic Banking at BMI Bank.
“The agreement announced today has been designed to provide an attractive opportunity for SMEs while positioning Tamkeen to pursue a long-term outlook of growth and future success. Tamkeen’s Finance Scheme provides greater flexibility to focus on meeting the demands of a dynamic marketplace in a time Islamic financing is becoming another major source of funds globally,” Tamkeen’s Chief Executive Mahmood Al Kooheji, said.
“Providing financing to support the private sector is one of Tamkeen’s main objectives, to provide beneficiaries with innovative and value-creating opportunities. This agreement reflects our confidence in BMI Bank who share the same optimism as we do towards enhancing market outlook. I am proud to say, the outcome of this effort has far reaching yields for us, all stakeholders, and the national economy going forward.”
Tamkeen had earlier in the year signed a separate ICT financing agreement with BMI Bank, earmarking BD 1 million to finance its ICT Finance Scheme where beneficiaries could apply for financing ranging from BD 3,000 to BD 50,000 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 Bahraini, 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.