DIB sweetens Islamic loan market

Dubai Islamic Bank (DIB) thinks it has a sweet deal for its customers - personal loans backed by sugar. The country's oldest Islamic institution is offering the first Sharia-compliant personal loan in the Arab world. Under Sharia, or Islamic law, a bank can offer financing only if real goods change hands. DIB's new product, Al Islami Salam Finance, is based on a centuries-old Islamic custom that gives farmers cash for a later delivery of dates. It is said the Prophet Mohammed noticed this practice when he first arrived in Medina in the eighth century.

Instead of using dates as the underlying commodity these days, DIB's financing will be based on a sugar futures contract. DIB says it chose sugar because it considered it a "safe" commodity with the smallest price fluctuations. The product launch coincides with a period of introspection in the Islamic finance industry. A series of defaults among Islamic issuers has sparked a debate in how far the industry should grow by mimicking conventional banking products to compete for investors.

"This is not a speculative transaction," said Hussain Hamed Hassan, a Sharia scholar who heads the bank's Sharia board. DIB's Salam Finance allows customers to take out a minimum of Dh25,000 (US$6,800) and up to Dh1 million based on the usual eligibility criteria, said Adnan Chilwan, the bank's head of retail and business banking. "This is upfront cash." When taking out Dh100,000 of Salam financing from DIB, a customer simultaneously enters a forward agreement with a sugar wholesaler for, say, Dh110,000 of sugar.

The supplier in DIB's case, Al Khaleej Sugar, is then committed to deliver the sugar to the bank at the end of the loan, which can run up to seven years. "The customer does not actually have to carry bags of sugar to the bank. Typically, there is no physical delivery involved," said Mr Chilwan. In the meantime, the customer pays monthly instalments to the sugar supplier. The bank and the sugar supplier carry the risk of changes in the price of sugar.

The bank said the new product came in response to customers asking for cash. "Customers have trouble to find cash on the table," said Abdulla al Hamli, the bank's chief executive. The bank had set aside Dh1 billion for the programme, which will have "low salary requirements", he said, but did not elaborate. The new product would boost the bank's profit and revenue, he said. DIB had the highest rate of non-performing loans, 8.7 per cent, among UAE banks last year. As a result, the bank, which is heavily exposed to property, has stopped lending for the sector.

Its loans and deposits have also grown only sluggishly in recent quarters. It took more than a year to design the new product and receive approval from the Sharia board, DIB said. uharnischfeger@thenational.ae

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Four tips to secure IoT networks

Mohammed Abukhater, vice president at FireEye in the Middle East, said:

- Keep device software up-to-date. Most come with basic operating system, so users should ensure that they always have the latest version

- Besides a strong password, use two-step authentication. There should be a second log-in step like adding a code sent to your mobile number

- Usually smart devices come with many unnecessary features. Users should lock those features that are not required or used frequently

- Always create a different guest network for visitors

Start-up hopes to end Japan's love affair with cash

Across most of Asia, people pay for taxi rides, restaurant meals and merchandise with smartphone-readable barcodes — except in Japan, where cash still rules. Now, as the country’s biggest web companies race to dominate the payments market, one Tokyo-based startup says it has a fighting chance to win with its QR app.

Origami had a head start when it introduced a QR-code payment service in late 2015 and has since signed up fast-food chain KFC, Tokyo’s largest cab company Nihon Kotsu and convenience store operator Lawson. The company raised $66 million in September to expand nationwide and plans to more than double its staff of about 100 employees, says founder Yoshiki Yasui.

Origami is betting that stores, which until now relied on direct mail and email newsletters, will pay for the ability to reach customers on their smartphones. For example, a hair salon using Origami’s payment app would be able to send a message to past customers with a coupon for their next haircut.

Quick Response codes, the dotted squares that can be read by smartphone cameras, were invented in the 1990s by a unit of Toyota Motor to track automotive parts. But when the Japanese pioneered digital payments almost two decades ago with contactless cards for train fares, they chose the so-called near-field communications technology. The high cost of rolling out NFC payments, convenient ATMs and a culture where lost wallets are often returned have all been cited as reasons why cash remains king in the archipelago. In China, however, QR codes dominate.

Cashless payments, which includes credit cards, accounted for just 20 per cent of total consumer spending in Japan during 2016, compared with 60 per cent in China and 89 per cent in South Korea, according to a report by the Bank of Japan.