A growing bias for Shariah-compliant borrowing among small and medium enterprises is helping Islamic banks and Islamic banking windows of conventional banks in targeting them.
But corporate and consumer financing still dominate their credit portfolios too heavily and SME loans remain only a small fraction of their portfolio-mix.
'Owners and managers of a large number of SMEs have a deeper craving for Shariah-compliant financial services than large businesses and companies," says the Shariah advisor of a local Islamic bank. "But IBIs have only lately started capitalising on this. The more they go for SME financing, the more they’ll realise this segment has a real big potential," he predicts.