Al Hilal Bank
Before we started, we had a dream, a dream to build a very different bank. It would make banking fresher, smarter and a lot more exciting, while still staying true to core Islamic values. This is Al Hilal Bank.
With an authorized capital of AED 4 billion, Al Hilal Bank was founded by the Abu Dhabi Investment Council, an investment arm of the Abu Dhabi government. From our home in Abu Dhabi, we opened our first four branches in UAE on the 19th of June 2008. Since then we have grown and grown and grown.
So what was the secret to our success? Quite simply,it was people. We opened in just 4 months because our dedicated staff worked day and night to make it happen. Without these very special people, we wouldn’t have the bank we have today. They are the cornerstone of everything we do. To get them meant some intensive recruiting. In total we probably interviewed around 10,000 professionals before handpicking the very best from this region and abroad. We were fortunate to recruit extremely talented UAE Nationals; that bring with them vast experience and wealth of knowledge of the local banking market.
About Islamic Banking:
Thanks to Islamic civilization, Muslims have been pioneers in the development of modern civilization and have significantly contributed to, inter alia, contemporary banking and finance both in theory and practice.
In theory, Ibn Khaldoun, in his masterpiece ‘Al Muqaddimah’ is considered to have addressed economic subjects 400 years before Adam Smith – founder of economics – wrote his book ‘The Wealth of Nations’. In practice, records show that several banking transactions were tried as early as the down of Islam. An example is the story that people would deposit their moneys to the esteemed companion of the holy Prophet, pbuh, Al-Zubair Bin Awwam, May Allah be pleased with him, who would tell them “Make it a loan, and I will guarantee it to you”. He would then invest these deposits in trade.
Sooner, Muslims became familiar with money transfers and the use of cheques. For instance, the then Prince of Aleppo (or Halab), Saif Addawlah Alhamadani, happened to visit Baghdad disguised as a commoner where he was hosted by the Bani Khaqan tribe. He then handed them a signed note ordering money exchangers in Baghdad to pay the -note-bearer 1,000 dinars.
Furthermore, some forms of Islamic finance were practiced throughout the middle Ages in Spain, the Mediterranean and Baltic States, thanks to the spread of Islam out there with the help of the Abbasi (Iraq) and Osman (Turkey) caliphates. However its practice gradually faded over time as it was an initiative from individuals, without government support.
The spread of foreign conventional (usurious) banks in most Muslim countries led by Western colonialism has created the need for an Islamic viable alternative. In view of the need of modern era to have banking services, Muslim scholars focused their efforts on coming up with a solution that would meet people’s needs and yet comply with the letter and spirit of the Shariah.
One of the first attempts to apply Islamic banking was in 1963 at Ghamr in Egypt, later on during the early 70s succeeded by the Nasser Social Bank, which was of saving nature. However, Modern Islamic commercial banking came into being only in 1975 when the UAE issued a decree to establish the first Islamic Bank, and so was it.
At first, Islamic banking tried to adopt more practical and low-risky-modes of finance. There could be no better than the product of Murabaha. Sooner, more products, including Mudaraba and Wakala, both restricted and unrestricted, were then employed to collect deposits with a view to investing them.
Thanks to the high demand and people’s thirstiness for Islamic finance, Islamic banking began witnessing innovation. Sophistication by conventional banks has also induced the Islamic banking industry to become more creative and sensible.
With conventional banks entering into Islamic banking, there’s a lot more competition in this fast growing market. This has called for new and more sophisticated financial tools, such as Istisna, Parallel Istisna, Musharaka, Diminishing Musharaka, Salam, Parallel Salam, Operating Ijara, Financing Ijara, Mudaraba and Investment Wakala and many others.
Some projects call for huge funds and capital. This has given rise to the creation of Investment Funds, Sukuk and syndications by the Islamic finance industry. Likewise, the need called for an Islamic compliant insurance and reinsurance for life and goods, and hence Islamic Takaful comes into being.
Unlike the tools of conventional banking, all of which revolve around virtually one thing, namely usurious contracts, Islamic banking enjoys the benefits of the many practical, yet ethical, Shariah-compliant products with their unique contractual natures and features.