National Bonds ties up agreement with Aafaq Islamic Finance to foster culture of saving
National Bonds, the Sharia-compliant investment company, plans to help customers of Aafaq Islamic Finance become more orientated towards saving money through a strategic tie-up with the firm. The move comes amid efforts by the nation’s policymakers to promote a savings culture among nationals and residents.
Under the agreement, the Dubai-based companies said they would work to develop financial services for customers that would encourage them to adopt a sustained habit of saving.
“Our efforts are designed to encourage more people from different segments of the society to adopt a financial plan for their future,” said Mohammed Qasim Al Ali, the chief executive of National Bonds.
“This agreement contributes to strengthening the position of Sharia-compliant financial products that are increasingly attracting customers across mixed-income groups and nationalities.”
Aafaq, which provides Islamic loans for homes and consumer items including cars, will use National Bonds’ electronic trading platform to enhance its sukuk trading services and support so-called murabaha-based personal financing. In addition, Aafaq will have the option to place its treasury deposits in the long-term investment products offered by National Bonds. Murabaha is a form of Islamic financing whereby a financial institution buys a commodity and agrees to sell it back to a client at a pre-agreed upon profit rate that is paid back in instalments.
A survey by National Bonds this month showed that almost four in five UAE residents do not believe their current savings will meet future needs. Rising housing and utility costs have pushed residents into deeper debt, the 2014 Savings Index from National Bonds found. A rise in house rents and utility bills have caused the most pressure on households, according to 78 per cent and 64 per cent of the respondents polled. More than half the respondents said they had outstanding loans with credit card use on the rise.
Price inflation in Dubai has been rising at the quickest pace in five years, boosted by increasing accommodation costs. The emirate’s inflation rate jumped to an annual high of 4.38 per cent in October, although it grew at a slower rate of 4.15 per cent in November as food costs dropped amid a weakening of global commodity prices. National Bonds is owned by the Investment Corporation of Dubai, one of the country’s sovereign wealth funds.
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Published: December 30, 2014 04:00 AM