Citigroup is considering opening Shariah-compliant banks in the Pakistan market to serve the Muslim population whose beliefs prohibit paying interest on loans. Financial institutions offering Shariah-compliant loans do not charge interest on the loans but instead make money through fees and profit-sharing arrangements with the borrowers.
Commenting on the potential market, Global Director of Citi Microfinance Robert A. Annibale said, “There are large microfinance banks in Indonesia, Bangladesh, Pakistan, Morocco, Egypt and India where the strength of the Muslim population is greater. But interestingly none of them are Shariah-compliant” [1].
Pakistan has seen substantial growth in its microfinance industry during the last few years, as its outreach growth rate has averaged 35% from 2004-2008, according to a report from Microfinance Information Exchange [2].
By Jennifer Shevock, Research Associate
About Citigroup:
Citigroup is a US-based international financial services conglomerate with consumer and commercial banking, brokerage, asset management and institutional securities and transactions operations. Total assets are USD 2 trillion at March 31, 2010, and total revenue as of March 31, 2010, is USD 25.4 billion.
Sources and Additional Resources:
[1] “Citigroup, Inc to Establish Shariah-Compliant Microfinance Banks in Pakistan” July 9, 2010
http://www.syminvest.com/market/news/microfinance/citigroup-inc-to-establish-shariahcompliant-microfinance-banks-in-pakistan/2010/7/9/2435?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+syminvestnewswatch+%28Symbiotic%27s+microfinance+news+feed%29
[2] Microfinance Information Exchange: http://www.themix.org/sites/default/files/2009%20Asia%20Microfinance%20Analysis%20&%20Benchmarking%20Report_0.pdf
MicroCapital Universe: Citigroup: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Citigroup
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