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Saturday, 28 December 2013

Migration to Islamic banking pays off for Dubai resident

Like many non-Muslim westerners, Eva Kernova converted to Islamic banking because that’s where some of the best rates and perks are to be found in the UAE today. And then, bit by bit, the former flight attendant warmed to a type of banking she found to be fairer and kinder than the conventional sort.

In Ms Kernova’s case, her impetus towards change began when she found herself in a jam this summer while moving to a new apartment in Dubai. She had just left her job at a local airline and needed Dh70,000 quickly in order to pay for her rent for the year in advance.

The local bank she was with, who she prefers not to name, wasn’t as forthcoming as she had hoped in providing the money, because she had just changed jobs and the bank wanted her to do at least six months in her new job before it would give her the loan.

In despair, she did not know what to do and feared that all banks would reject her request.

“I went to my bank and they said it was very complicated,” says Ms Kernova. “We have to wait for this, we have to wait for that. You expect a certain service and I didn’t get that. I was very disappointed and I felt quite low.

“I was not looking for a [new] bank at that point. I felt as if I was trapped a little bit. And then one day as I was driving, on the radio, there was an ad. Abu Dhabi Islamic Bank had a special offer until the end of June on loans.”
She didn’t know much about Islamic banking – the main difference of which from conventional banking is that it does not charge interest but instead makes customers pay a profit rate through various financial instruments. If a customer needs money to buy a house, for instance, an Islamic bank will buy the house and then sell it back to the client at an agreed price over a set time.

At that point, however, Ms Kernova wasn’t interested in the fine print. She was just keen to get the money she needed at a good rate as quickly as possible.

Yet once the issue was resolved and Adib gave her the loan, Ms Kernova found the perks, such as women-only banking services, to her taste as well. She even liked the colours of the bank’s credit cards .

And the more she found out about how Islamic banks strive to be more ethical than their conventional peers by avoiding certain businesses including those that deal with arms or alcohol, the happier she became with her choice. She now says she would never think about going back to a non-Islamic bank as long as she is living here.

Ms Kernova, who is from Slovakia and has a master’s degree in social work, was particularly gratified to find out that Islamic banks give up to 2 per cent of the bank’s profits to charity every year. That’s because after leaving her cabin crew job, which allowed her to see the world, she is in the process of starting a charity in Bangladesh along with an airline pilot to help children from the slums of Dhaka get a better education.

As well as the charitable aspect of Islamic banking, she says she liked being in sync with the local culture.

(The National / 27 Dec 2013)
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