Going in line with its tradition of meeting the needs and expectations of its customers through a service package that enhance customers’ convenience, United Bank is pleased to announce the commencement of Interest Free Banking services in its branches starting May 1, 2014.

United received the green light from the National Bank of Ethiopia to launch the service, after going through the necessary prerequisites including the preparation of a detailed proposal document incorporating policy matters, procedures, implementation strategy, risk management and other vital issues that are believed to be critical to the smooth rendering of the service. The application presented to the NBE received acceptance corresponding with the details of the directive that allowed banks to render the service alongside other conventional banking services.

This new service which will involve mobilizing or advancing funds without receiving or paying interest will be offered on a separate window of the bank’s branches targeting individuals, business companies, unions, co-operatives and non-governmental organizations (NGOs).

The services offered under the interest free banking will include deposits in the form of Wadiah and Mudharabah, loans and advances using musyarakah, murabahah, Istisnah, Salam and Ijarah principles, and international trade finance on the base of Wakalah and Kafalah, and many more.

According to the procedures used to govern the services under the scheme, loans that require interest payment are excluded from the service package replaced by a different financing path, whereby the finance recipients will enter a profit as well as a risk sharing agreement. In the same manner, the deposits mobilized in the scheme are independent of the financial deposits of the parallel conventional banking system.

All the services provided under the non-interest free banking scheme will be supported by the bank’s core banking solution, which has been recently upgraded to the latest version of 12.0.1 enabling us to deliver more personalized and convenient services across multiple channels.