Dashen Bank has unveiled a new financing service called "Dube Ale-Interest Free Banking" that complies with Islamic sharia law principles.
The pioneering installment purchase program is powered by EagleLion's customized mobile app. In a first for Ethiopia, the scheme allows customers to make purchases on credit from participating merchants and pay later over periods ranging from three to twelve months, without interest charges.
Previous financing options in Ethiopia involved interest payments, but this new service adheres to sharia prohibitions on interest by structuring repayments in other ways.
According to a bank official, users can access the service by downloading an app, registering, and verifying their account at a Dashen Bank branch. This determines their spending limits based on income details from employers.
Repayments can be made via the bank's mobile platform or direct withdrawals. Customers with assets can provide guarantees or deposits to secure the financing.
The maximum spending limit is 700,000 birr to be paid exclusively through the app. The bank says this aims to boost economic activity by enabling purchases without immediate cash.