The Bank of Maldives (BML) has announced that the SME Development Finance Corporation (SDFC) will operate as a Shariah-compliant Islamic financial institution followings its acquisition by the bank.
The Cabinet on Sunday approved the sale of the government’s stake in SDFC to BML, after an extensive review by the Ministry of Finance and Planning assessing a proposal submitted by BML. According to the government, the transfer of ownership to BML is intended to ensure uninterrupted loan services to SMEs. The sale of the government’s stake at SFDC to BML will ensure this through BML’s financial capacity, it said.
Following the decision, BML said the government’s decision will increase the financial participation of the people and increase the prosperity of the Maldivian economy.
After the acquisition of SDFC by BML, SDFC will function as an Islamic financing institution conducting financial transactions in accordance with Shariah principles, within BML’s digital-first banking framework. Under the new arrangement, SDFC will offer Islamic financing services to Maldives’ micro, small and medium enterprises (MSMEs) with the latest technology, the bank said.
Key target sectors under the new SDFC model:
• Start-ups and newly started businesses
• Women-led businesses
• Fisheries sector
• Agricultural and farming businesses
• Trade and e-commerce businesses
BML’s Chief Executive Officer, Mohamed Shareef the acquisition will enable the bank to provide affordable and accessible financing solutions to businesses in these sectors through SDFC. These will include a variety of products designed to accelerate business growth, powered by the strength of the Maldives’ largest bank, Shareef said.
BML said the acquisition of SDFC is aimed at facilitating the digital transformation of MSME banking in the Maldives by leveraging BML’s robust financial position, extensive national network and growing digital banking expertise. In addition to providing financial assistance and financial awareness to the MSME sector, SDFC will provide specialised financial solutions such as digital lending platform and digital marketplace.
BML aims to provide financing of USD 32.4 million through the subsidiary within the first year. It will also invest USD 19.4 million over three years through the Maldivian Islamic Social Financing Initiative (MISFI) to support community development and sustainable business growth.
The bank said further details on governance, operations, and service rollout of the new SDFC system will be disclosed in the coming weeks.