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On July 5, Islamic Bank Australia received its Restricted Authorized Deposit-taking Institution (Restricted ADI) license from the Australian Prudential Regulation Authority (APRA).
The Restricted ADI which is a precursor to a completely developed ADI license only accepts up to AUS$2million ($1.35 million) in deposits. This license period can continue up to two years and then the Islamic Bank Australia will be able to establish systems, carry out processes and test products with a small number of customers in 2023. Dean Gillespie, CEO of Islamic Bank Australia, hopes that a full banking license will be granted by APRA towards the end of 2023 or in early 2024.
He said that they can raise deposits and will be able to access interbank funding. According to him, for supporting the platform’s offering, the bank plans to exploit foreign investors. He believes that educating customers about realizing Islamic financial products structures like Murabaha and Mudaraba will be an important challenge.
Dr Sayd Farook, Senior Partner at Dinar Standard said persistence of Islamic Bank Australia for receiving a full ADI license is admirable and asked whether heavily concentrating on deposits is a feasible business model. He suggested that the founders should concentrate on gradually reducing the smaller slices of the profitable financing market where stronger margins can be made like residential financing, and business and asset finance. One Islamic finance practitioner referred to the latest failure of Volt Bank, an Australian digital challenger bank, which failed to raise adequate funds to support its business and ceased operating last month. But Gillespie believes that his organization is different from Volt and other new banks with regard to proposition and target customers.
Source: Salaam Gateway
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