ADDIS ABABA – The Commercial Bank of Ethiopia (CBE) announced that it would inaugurate the country’s first full-fledged interest-free branch dubbed ‘Bilal Branch’ in Addis Ababa on Saturday September 7, 2019 in a view to satisfying customers’ requests and running the business independently.
In an exclusive interview with The Ethiopian Herald, CBE Interest Free Banking (IFB) Vice President, Nuri Hussein said that the annual year-to-year increase in deposits and customer base of non-interest business is more than the growth of its conventional counterpart. The Vice President stated that CBE was a champion in mobilizing deposit through IFB windows and currently 1,382 branches in 1,894 windows have been providing the service across the country. CBE’s IFB total deposit stood at 23.9 billion Birr at the close of 2018/19 fiscal year and Bank’s customer base passed two million by the same period.
Noting that banks use different structures to render IFB services such as window model, branch model and fully interest-free bank model, Nuri said that CBE used to be limited to the window model prior to the financial reform the National Bank of Ethiopia introduced recently.
“During a preparation of the annual plan for 2019/20 budget year, we came to understand that the business is capable of operating independent of conventional wing and we decided to upscale the window model to branch model taking advantage of the NBE’s reform.”
According to him, customer sessions conducted during the past fiscal year was also informed the Bank that there is a strong demand for an independent and dedicated service among the two million IFB customers. The VP indicated that the difficulty the Bank has been facing to provide convenient service to ever-expanding IFB customers at the existing window level is also a key factor in convincing the CBE management to open dedicated branches.
Accordingly, CBE has identified areas with huge customer potentials and decided to open 10 additional IFB dedicated branches in Addis Ababa and 44 in regional states in the 2019/20 fiscal year in a view to ensuring customer satisfaction and keeping the business growth.
Nuri pointed out that CBE’s engagement of opening dedicated branches would also have paramount importance to address customers wary of the possible mixture of their deposits in the IFB with the money in conventional service. By doing so, the new branches would play pivotal role to enhance customer service and banked the unbanked capital thereby boosting CBE’s deposit level and loan disbursing capacity.
Opening IFB dedicated branches would also meet the recommendation of the recently-formed CBE Sharia Advisory Committee and create a favorable ground to the committee better execute its mandate of ensuring Sharia compliance thereby boosting customer’s confidence in the service, the VP remarked. IFB service in the CBE was introduced in 2013 using twenty six branches.
The Ethiopian Herald, September 3/2019
BY BILAL DERSO
